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ASA’s

THE OFFICIAL EDUCATIONAL JOURNAL OF THE AMERICAN SUBCONTRACTORS ASSOCIATION

WWW.ASAONLINE.COM

OCTOBER 2018

Human Resources The Skilled Trade Shortage and What You Can Do to Recruit Labor by Mike Brewer, Brewer Companies, and Todd Sanders, Greater Phoenix Chamber of Commerce

Overcoming the Challenges of Finding and Developing Talent in the Construction Industry by Sarah Mueller and Jesus Yactavo, Shapiro & Duncan

The Reefer Revolution: The Impact of Marijuana in the Workplace by Mary E. Buckley, Cross, Gunter, Witherspoon & Galchus, P.C.

The Evolution of the ‘Talent Director’ in Today’s Construction Organizations by Gregg M. Schoppman, FMI

Importance of Keeping Your Employee Handbook Up-To-Date by Jamie Hasty, SESCO Management Consultants

How Your Culture Can Impact Safety and Project Delivery—and Ultimately, Your Bottom Line by Kiersten Rippeteau, CODP, Palmer Consulting Group

Importance of Background Checks and Drug Testing by Adam Kneisley, SESCO Management Consultants

AIA or ConsensusDocs Contracts: Which Standard Construction Contracts Are Best for Your Project? by Brian Perlberg, ConsensusDocs

The Disaster Artist—An Examination of What Drives Failing Businesses at Their Peak by Gregg M. Schoppman, FMI ‘But Can They Fog a Mirror?’ A Strategic Approach to Recruiting Top Tier Talent by Gregg Schoppman, FMI

Tips Regarding Fully Complete I-9 Forms by Julie A. Pace and Heidi NunnGilman, The Cavanagh Law Firm Wearables—The Next Wave of Disruption in Construction by David P. Galbraith, Amerisure Mutual Insurance Company

LEGALLY SPEAKING: Davis-Bacon Audits by Julie A. Pace and Heidi NunnGilman, The Cavanagh Law Firm


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March 6-9, 2019 | Nashville, Tennessee www.subexcel.com

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October 2018

Features EDITORIAL PURPOSE The Contractor’s Compass is the monthly educational journal of the Foundation of the American Subcontractors Association, Inc. (FASA) and part of FASA’s Contractors’ Knowledge Network. The journal is designed to equip construction subcontractors with the ideas, tools and tactics they need to thrive. The views expressed by contributors to The Contractor’s Compass do not necessarily represent the opinions of FASA or the American Subcontractors Association, Inc. (ASA). EDITORIAL STAFF Editor-in-Chief, Marc Ramsey MISSION FASA was established in 1987 as a 501(c)(3) taxexempt entity to support research, education and public awareness. Through its Contractors’ Knowledge Network, FASA is committed to forging and exploring the critical issues shaping subcontractors and specialty trade contractors in the construction industry. FASA provides subcontractors and specialty trade contractors with the tools, techniques, practices, attitude and confidence they need to thrive and excel in the construction industry.

The Skilled Trade Shortage and What You Can Do to Recruit Labor......................................... 8 by Mike Brewer, Brewer Companies, and Todd Sanders, Greater Phoenix Chamber of Commerce

The Evolution of the ‘Talent Director’ in Today’s Construction Organizations...................... 10 by Gregg M. Schoppman, FMI

How Your Culture Can Impact Safety and Project .................................................................. 12 Delivery—and Ultimately, Your Bottom Line by Kiersten Rippeteau, CODP, Palmer Consulting Group

The Disaster Artist—An Examination of What Drives Failing Businesses at Their Peak...... 14 by Gregg M. Schoppman, FMI

‘But Can They Fog a Mirror?’ A Strategic Approach to Recruiting Top Tier Talent................. 16 by Gregg Schoppman, FMI

Overcoming the Challenges of Finding and Developing Talent ............................................. 18 in the Construction Industry by Sarah Mueller and Jesus Yactavo, Shapiro & Duncan

FASA BOARD OF DIRECTORS Richard Wanner, President Letitia Haley Barker, Secretary-Treasurer Brian Johnson Robert Abney Anne Bigane Wilson, PE, CPC

Importance of Keeping Your Employee Handbook Up-to-Date.............................................. 20

SUBSCRIPTIONS The Contractor’s Compass is a free monthly publication for ASA members and nonmembers. Subscribe online at www.contractorsknowledgedepot.com.

Tips Regarding Fully Complete I-9 Forms................................................................................ 23

ADVERTISING Interested in advertising? Contact Richard Bright at (703) 684-3450 or rbright@ASA-hq.com or advertising@ASA-hq.com.

by David P. Galbraith, Amerisure Mutual Insurance Company

EDITORIAL SUBMISSIONS Contributing authors are encouraged to submit a brief abstract of their article idea before providing a fulllength feature article. Feature articles should be no longer than 1,500 words and comply with The Associated Press style guidelines. Article submissions become the property of ASA and FASA. The editor reserves the right to edit all accepted editorial submissions for length, style, clarity, spelling and punctuation. Send abstracts and submissions for The Contractor’s Compass to communications@ASA-hq.com. ABOUT ASA ASA is a nonprofit trade association of union and non-union subcontractors and suppliers. Through a nationwide network of local and state ASA associations, members receive information and education on relevant business issues and work together to protect their rights as an integral part of the construction team. For more information about becoming an ASA member, contact ASA at 1004 Duke St., Alexandria, VA 22314-3588, (703) 684-3450, membership@ASA-hq.com, or visit the ASA Web site, www.asaonline.com. LAYOUT Angela M Roe angelamroe@gmail.com

by Jamie Hasty, SESCO Management Consultants

Importance of Background Checks and Drug Testing.............................................................. 22 by Adam Kneisley, SESCO Management Consultants by Julie A. Pace and Heidi Nunn-Gilman, The Cavanagh Law Firm

Wearables—The Next Wave of Disruption in Construction.................................................... 26 The Reefer Revolution: The Impact of Marijuana in the Workplace....................................... 28 by Mary E. Buckley, Cross, Gunter, Witherspoon & Galchus, P.C.

AIA or ConsensusDocs Contracts: Which Standard Construction Contracts........................ 30 Are Best for Your Project? by Brian Perlberg, ConsensusDocs

Departments ASA PRESIDENT’S LETTER..................................................................................................... 5 CONTRACTOR COMMUNITY.................................................................................................. 6 LEGALLY SPEAKING............................................................................................................... 34

Davis-Bacon Audits

by Julie A. Pace and Heidi Nunn-Gilman, The Cavanagh Law Firm

Quick Reference

© 2018 Foundation of the American Subcontractors Association, Inc.

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ASA/FASA CALENDAR........................................................................................................... 37 COMING UP........................................................................................................................... 37 C O M P A S S

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Paycheck Checkup Can Prevent a Tax-Time Surprise It’s important to check your federal income tax withholding now to avoid an unexpected tax bill or penalty at tax time. The IRS Withholding Calculator can help.

Everyone should check their withholding. Due to tax law changes, it’s especially important to check now if you: • • • • • • • •

Are a two-income family Have two or more jobs at the same time Work a seasonal job or only work part of the year Claim credits like the child tax credit Have dependents age 17 or older Itemized your deductions on your 2017 return Have high income or a complex tax return Had a large tax refund or tax bill for 2017

Use the IRS Withholding Calculator to do a Paycheck Checkup • The IRS Withholding Calculator helps figure out if you should submit a new Form W-4 to your employer. • Have your most recent pay stub and federal tax return on hand. • The calculator’s results are only as accurate as the information you enter. • Find the IRS calculator at IRS.gov/withholding.

Publication 5303 (6-2018) Catalog 71495F Department of the Treasury Internal Revenue Service www.irs.gov


ASA PRESIDENT’S LETTER Dear ASA Members: If you still have questions whether your company ought to use ConsensusDocs standard form documents instead of AIA’s, Brian Perlberg, executive director and senior counsel for ConsensusDocs, makes a compelling argument in his feature article, “AIA or ConsensusDocs Contracts,” in this edition of The Contractor’s Compass. “The American Institute of Architect’s mission includes ‘to organize and unite’ and ‘promote’ the architectural profession,” Perlberg writes. “The AIA’s contracts show a bias toward architects. AIA contracts give architects a disproportionate share of decision-making authority without the same level of responsibility. ConsensusDocs’ goal, on the other hand, is to write fair contacts that advance better project results. Fairness stems from neutralizing bias by giving all the stakeholders to the A/E/C industry an equal voice to the drafting table.” That’s just his comparison of “missions” between the two organizations. Perlberg goes on to compare and contracts communications, the role of the owner, project financial information and sharing, writing style, case law, dispute mitigation, and design documents. “Historically, AIA contract documents funnel all communications through the architect,” Perlberg writes. “The AIA A201 General Conditions is for a contract between an owner and contractor, and yet the most prevalent word is architect. When coupled with an AIA agreement, the word architect appears 400 times. Historically, the owner and contractor were NOT supposed to communicate directly with one another, but ONLY through the architect. Thankfully this obstacle has finally been removed in 2017, but the basic structure remains.” “ConsensusDocs,” Perlberg continues, “emphasizes positive and direct party communications. Parties are encouraged to speak directly to one another, early and often in the project to facilitate a positive relationship.”

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As for sharing of project financial information, ConsensusDocs allows a builder to request and receive project financial information before and during construction. “ConsensusDocs provides the industry’s only standard questionnaire and guidelines to help ask reasonable questions about project financing,” Perlberg writes. “AIA restricts access to receive financial information once the project commences.” Another huge difference is writing style. “The ConsensusDocs are written from the perspective that good legal writing is simply good writing,” Perlberg writes. “Contract language with a clear and concise language helps the parties understand, administer, and interpret the contract. A distinguishing feature in ConsensusDocs is the integration of the general terms and conditions and the agreement into one document. This avoids the two documents from conflicting and avoids confusion. Provisions are written so that the responsibilities and obligations, such as indemnification, are reciprocal on both parties in a consistent fashion.” “Over ConsensusDocs’ 10-year history,” he continues, “a great deal of effort has been made to refine the language and make sure it is consistent in style and even placement throughout the family of 100-plus contract documents. ConsensusDocs comprehensively revises its documents once every five years but also has the flexibility for discrete revisions.” On the other hand, AIA contract documents are updated once every 10 years. “Given their long history, AIA’s substance and language style is slower to change,” Perlberg writes. “The substantive terms are not always consistent when comparing an architect’s responsibilities and a contractor’s.” Case Law and Litigation Case law and litigation are critical factors that should be considered, as well. AIA has published contract documents

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since 1888, and AIA documents, old and new revisions, generate a great deal of case law and decisions interpreting the language in the documents. “There are entire case law books devoted to the cases generated by litigated projects using the AIA contract documents,” Perlberg writes. “AIA touts the breadth of case law associated with AIA contract documents.” ConsensusDocs has been around for over 10 years. “Billions of dollars have been put in place using the documents,” Perlberg says. “Not one reported case has been generated using ConsensusDocs. ConsensusDocs touts the infrequency of projects that fall into litigation using their documents.” Now with a 10-year track record, ConsensusDocs provides a solution developed and endorsed by industry-wide participants for standard design and construction contracts. ConsensusDocs takes a plain English and fair-to-all-parties’ approach, and encourages direct party communications to build positive collaboration. Constructors are viewed as problem-solvers rather than problem-makers. ASA is a founding member and leader of the ConsensusDocs coalition. ASA members save 20 percent off ConsensusDocs subscription packages using the code ASA100 at checkout at www.consensusdocs.org. When you consider the differences between the ConsensusDocs and AIA standard form contracts, the decision to use ConsensusDocs seems obvious. Best Regards,

Courtney Little 2018-19 President American Subcontractors Association

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CONTRACTOR COMMUNITY Free Nov. 13 ASA Webinar Examines Ways to Improve Communications Between GCs and Subs In the complimentary Nov. 13 ASA webinar, “The Soft Side of Scheduling: Improving Communications Between GCs and Subcontractors,” presenter Steve Groth, vice president, director of operations, Chiaramonte Construction, Washington, D.C., will examine ways to improve project management communication between GCs and subcontractors specifically as it relates to the project schedule from development to finalization and use during the project. As a construction management professional, Groth’s 35-year career as a general contractor and construction manager has provided him the opportunity to lead pre-construction and construction operations that resulted in the successful completion of over $800 million in construction projects and the growth and success of organizations. This webinar will take place from noon to 1:30 p.m. Eastern time. Registration is complimentary for ASA members and nonmembers. Register online.

Foundation of ASA Updates Lien & Bond Claims in the 50 States for 2019 Construction subcontractors and suppliers rely on mechanic’s lien and payment bonds to assure their

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payment. To help you learn your lien and bond rights in the states in which your company does business, the Foundation of ASA has updated its Lien & Bond Claims in the 50 States, a digital manual which outlines the lien and bond laws in each state and the District Columbia. A mechanic’s lien is a claim against property to secure a debt, such as a debt owned to a construction subcontractor for the value of work performed and materials furnished on a construction project. A payment bond, which is required on most public construction, assures the owner that the prime contractor will pay its subcontractors and suppliers. The FASA manual provides a summary of the basic requirements of each state’s lien and bond laws, including who is covered; critical deadlines for notices, claims and suits; filing procedures; and more. The summary of laws was prepared by Donald W. Gregory, Esq., and Eric B. Travers, Esq., Kegler, Brown, Hill & Ritter, Columbus, Ohio, ASA’s general counsel, with input from attorneys from around the country. Lien & Bond Claims in the 50 States (Item #3006) is $55 for ASA members and $80 for nonmembers.

ConsensusDocs Coalition Publishes Lean Addendum ASA and 39 other industry leading associations that are a part of the ConsensusDocs coalition on Sept. 6 announced the industry’s first Lean Addendum standard contract document. The ConsensusDocs 305 utilizes Lean tools and processes without an Integrated Project Delivery agreement.

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Not all owners may procure design and construction services with an IPD or integrated Lean project delivery agreement. The ConsensusDocs Lean Addendum provides a contractual mechanism for owners, architects, engineers, general contractors, and subcontractors alike to take advantage of Lean construction efficiencies and memorialize in writing a more collaborative and cooperative culture on projects. Joe Cleves, partner at Taft law firm in Cincinnati, who served as chair for the ConsensusDocs coalition working group that developed the Lean Addendum, explained: “This new standard addendum is perfect for all stakeholders involved in the design and construction process interested in incorporating Lean processes on CM At-Risk projects. Publication of this document will benefit the industry in adopting Lean tools, which have a demonstrated increase in construction productivity.” The ConsensusDocs coalition was first to publish a standard IPD agreement in 2007. The Lean Addendum is significantly shorter than other integrated forms of agreement, such as the ConsensusDocs 300 standard IPD agreement. The ConsensusDocs 305 coordinates well with a CM At-Risk agreement as the underlying prime agreement, such as the ConsensusDocs 500 CM At-Risk agreement. Many would characterize the use of a CM At-Risk agreement with the Lean Addendum as an “IPD-lite,” “IPDish,” or “transitional” IPD agreement.

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ConsensusDocs standard construction contracts are the only contracts written and supported by a coalition of leading design and construction industry organizations. With a catalog of 100+ contract documents addressing all project delivery methods, ConsensusDocs contracts incorporate fair risk allocation and best practices to represent a project’s best interests. The Coalition’s organizations collectively represent hundreds of thousands of design professionals, owners, contractors, subcontractors, and sureties. ASA is a founding member of the ConsensusDocs coalition. ASA members can save 20 percent off ConsensusDocs subscription packages by using the promotional code ASA100 during checkout at www.ConsensusDocs.org.

Applications for ASA’s National Construction Best Practices Award Are Due Nov. 2, 2018 The deadline for applications for ASA’s National Construction Best Practices Award is Nov. 2, 2018. The best practices award recognizes prime contractors that exemplify the values of subcontractors, treat subcontractors fairly through use of level-playing-field contract terms, and consider subcontractors part of their core project teams. ASA encourages you to invite your best prime contractors to apply for these awards. Details, resources, and the application are located under “About ASA” on the ASA Web site.

series of training videos on OSHA’s standard for respirable crystalline silica in construction. The six new videos instruct users on methods for controlling exposure to silica dust when performing common construction tasks, or using construction equipment. The videos cover topics including handheld power saws, jackhammers, drills, and grinders. On Aug. 13, OSHA released a set of 53 frequently asked questions to provide guidance to employers and employees on the silica standard. ASA is a member of the Construction Industry Safety Coalition, which was an important contributor to the formulation of this FAQ. The development stemmed from litigation filed against OSHA by numerous construction industry trade associations, including ASA, challenging the legality of the new silica rule. Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA’s role is to help ensure these conditions for America’s working men and women by setting and enforcing standards, and providing training, education and assistance. Visit OSHA’s silica standard for construction page for more information and resources on complying with the standard.

OSHA Releases Series of New Training Videos on Silica Standard The U.S. Department of Labor’s Occupational Safety and Health Administration on Aug. 22 released a

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Before You Bid or Negotiate Your Next Contract, Consult FASA’s Retainage Laws in the 50 States Before you bid or negotiate your next contract, be sure to know the laws regarding retainage where the project is located. FASA’s Retainage Laws in the 50 States 2018 summarizes retainage laws in the states and the District of Columbia. Each state entry reviews critical factors in retainage laws for public and private work, including the rate permitted, release milestones and any options to provide alternative securities in lieu of retainage. In most states, retainage is a typical practice in both public and private construction contracts. The mandatory or permissive nature of retainage varies from state to state. In a few states, the retained funds may be held in escrow, to be paid back to the contractor or subcontractor with interest. Some states also permit contractors and subcontractors to substitute securities in lieu of retainage. Other states require contracting agencies or owners to reduce or even eliminate the rate of retainage once a certain portion of the contract is complete. The ASA-member law firm and ASA general counsel, Kegler, Brown, Hill and Ritter in Columbus, Ohio, prepared the manual, which contains contributions from construction attorneys from across the country. Retainage Laws in the 50 States is available under “Contracts and Project Management” in the Member Resources area of the ASA Web site by logging-in at “LogIn/Access Member Resources” on the ASA Web site at www.asaonline.com.

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Feature The Skilled Trade Shortage and What You Can Do to Recruit Labor

by Mike Brewer, Brewer Companies, and Todd Sanders, Greater Phoenix Chamber of Commerce The state of Arizona and our country are at a turning point. Our economies are growing, but our infrastructure is degrading and our ability to keep up with the pace of our growth is slowing. It’s time to face facts. When it comes to infrastructure, the United States is practically failing. According to the American Society of Civil Engineers, the country’s overall grade for infrastructure is a D. In fact, 9.1 percent of bridges in the country are structurally deficient. When these bridges fail, they are increasingly expensive to replace. Every year, traffic delays cost $160 billion in wasted time and fuel. Transit, a key to reducing traffic, is struggling to expand despite efforts from cities and towns. It’s not just transit that needs to expand to meet demand—it’s also airports. We’ve all seen the impressive growth and modernization happening at Phoenix Sky Harbor International Airport. In their most recent report, the ASCE stated that soon the majority of airports will experience holiday-like congestion on a weekly basis. If the economy is growing and businesses are growing, then why is our infrastructure still a decade or more behind? Simple. Our community lacks the talent needed to fill critical construction and skilled-trade positions. In Arizona, there are more than 10,000 vacant construction trade positions. In a 2016 HomeAdvisor survey, 93 percent of industry respondents said the labor shortage is preventing their businesses from growing over the next year. This struggle to find qualified employees has real economic consequences for not only construction firms, but their customers and vendors as well. Talent gaps limit a state’s ability to grow— delaying key projects means slower economic growth. If we expect our city, our region and our country to continue to thrive, then

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we need to work together—the business community, education institutions and others—to encourage individuals to launch their construction careers and learn a trade skill that will help build the foundation for our continued economic growth. The construction industry in Arizona is working together to combat the stigma around construction jobs and highlight what a career in construction looks like in 2018. Through a collaborative process, we are bringing the business community, educators and government together to develop a multi-pronged solution to Arizona’s construction trade workforce crisis.

opportunities to suit all interests. Many positions in construction require highly skilled people who are highly compensated, given that their specialized skills are in high demand. To put it succinctly, many of today’s construction industry employees are highly sought after community contributors. And that’s how we should be talking about them. For too long our society has downgraded the value and importance that skilled-trade workers play in our economic future. These vital careers deserve respect and to be highlighted as solid career pathways for any individual.

Construction Is More Than a Job

Appealing to the Masses

It’s time to showcase what a career in construction looks like in the 21st century. Stacks of neatly rolled up blue prints have been replaced with tablets loaded with digital blueprints. Aerial vehicles and drones are conducting site surveys. And sustainable building and LEED certification are driving the future of design and construction. All of these changes have not only created new roles for the construction industry, they are also changing the way traditional construction jobs are performed. One of the main reasons these skilledtrade careers are vacant is because the construction industry isn’t discussed as a viable pathway for people of all career aspirations. Arizona has more than 10,000 empty positions, waiting for someone willing to learn a skill and build a career. Today, construction career pathways possess all the qualities that most people look for when searching for meaningful employment: high starting pay, on-the-job training, benefits, job availability and growth potential. It’s time to dispel the perception that construction jobs aren’t careers. Construction is not only a viable career pathway, it provides a multitude of

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We need to band together to target potential talent for this industry—but it goes beyond that. In an Associated General Contractors of America survey, 86 percent of contractors reported they were struggling to fill hourly craft jobs or salaried professional positions. Why? Because people aren’t entering the construction industry at the same rate they had in the past. According to Go Build America, for every five people who retire from the trades, only one replacement is being trained in apprenticeship programs. On average, tradespeople in the industry are 47 years old. And only 10 percent of the workforce is female. A key challenge to filling Arizona’s 10,000-plus empty construction positions is reaching out to potential talent—students interest in vocational education, women and individuals stuck in a job with no progression that are looking to start a career with growth potential and opportunities to earn while they learn. An entry-level construction job can lead to a fruitful career. More importantly, the average wage for

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construction trades is $49,000 per year, which is higher than Arizona’s average salary across all industries. Construction jobs represent more than just a wage, they represent opportunity. What’s more impressive is that nine out of 10 individuals who complete an apprenticeship program are employed. In fact, many construction jobs only require minimal training and certifications. For those with the desire to grow their career, there is plenty of opportunity. Through additional certificates and four-year degree programs, many transition from hands-on work to leading an entire construction site with formal project management training. It’s not just students and potentials workers we have to convince—it’s their families as well. It is no secret that construction careers are not necessarily attractive, nor are they viewed as viable lifelong career options. If you ask parents if they would encourage their children to explore a career in this industry, they would most likely respond with a resounding “no!” We must educate everyone—students, parents, teachers and counselors—that these jobs can lead to a successful and fulfilling career for anyone.

Increasing Pathways to Quality Training Programs We must ensure that individuals interested in a construction career have easy and accessible exposure to the industry and to training opportunities. In an effort to better align training opportunities with employers’ needs, the Greater Phoenix Chamber Foundation has gathered leading construction companies to address their talent needs differently, through a collective approach. The Construction Workforce Collaborative is applying the U.S. Chamber of Commerce Foundation’s Talent Pipeline Management model to look at the issue from a supply chain perspective to craft

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a data-driven solution. Through this collaborative approach, employers are leading the conversation and connecting with education institutions. Whether it’s Joint Technical Education Districts or community college trades programs, there are numerous welldeveloped training programs for prospective tradesmen and tradeswomen. And businesses are working with these institutions to attract individuals—especially high school students and graduates—to these training opportunities. Unfortunately, several of these training programs lack the students and resources to train future construction and trade-skills people at the level needed. We need to ensure our schools, especially those specializing in career and technical education, have a solid pipeline of students and the appropriate resources—such as equipment and teachers—to educate and train students interested in construction trade careers. If we are to move our economy forward, the business community needs to work to promote these education and training opportunities in the construction industry at all levels.

So, What’s the Message? It all comes down to what those of us in the industry already know—construction jobs are more plentiful, profitable, respectable and safer than ever. These careers are building our cities and growing our economies. The construction industry is not a “last resort.” It is a career path built on the values of hard work, pride and honor. Yes, these jobs are hard. You will get your hands dirty. But even in year one, you will earn a wage that will allow you to support yourself and your family. This is a career path that not only will allow you to avoid student debt, but will give you the opportunity to earn while you learn.

With a multi-faceted approach, business leaders can work with community members to build Arizona’s construction and skilled trades workforce. By changing the conversation, targeting key talent opportunities and bridging the gap between employers’ needs and training opportunities, we can create the workforce needed to sustain our economic growth. It won’t happen overnight, but anything worth building takes time. If we start today, we can ensure a sustainable talent pipeline for our construction companies and ensure Arizona’s uninhibited economic growth. It can happen in your community, too. I urge construction leaders in other areas to engage with a convening organization, such as your chamber of commerce, to bring together industry leaders, education partners and elected officials to begin solving complex issues. If the message and the goal are to come together for the greater good of the community, then leaders will be eager to engage. Our leaders in Phoenix are willing to serve as thought leaders and mentors to anyone seeking to implement similar initiatives in their communities. We encourage you to connect with us and allow us to help strengthen your communities as well. Let’s work together. Let’s build on our region’s success. Let’s be the place where people and companies want to do business. Mike Brewer is the CEO of the ASAmember company, Brewer Companies & Benjamin Franklin Plumbing, Phoenix, Ariz. Todd Sanders is the president and CEO of the Greater Phoenix Chamber of Commerce.

We Are Building Arizona Together

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Feature The Evolution of the ‘Talent Director’ in Today’s Construction Organizations by Gregg M. Schoppman, FMI Consider how time has evolved certain roles within organizations. For instance, 40 years ago, firms staffing full-time safety professionals to lead and support their endeavors in the life safety arena. Today, that same role continues to evolve with the incorporation of risk management as an overarching theme. Similarly, information technology’s warp speed and trajectory has rapidly morphed a position that was often relegated to the margins of simply maintaining hardware to that of a c-suite position that often compliments the financial roles, risk management roles and business development roles handling everything from the website and social media to data security. Organizations continue to evolve and incorporate new roles that arise from the demand of the marketplace. Human resources associates evoke images of a stodgy paper pusher that either helps process required paperwork during hiring or shows up on that

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fateful last day of employment. This is no longer enough in today’s firms to drive proactive and leading strategies. Enter the “Talent Director.”

Lights An essential element of every firm’s strategic plan should involve cultivating human capital in some form or fashion. With the prevalence of issues surrounding the industry and the perceived inability to “find good people,” it would grossly negligent to forget a series of actions around finding and/or retaining talent. More importantly, every firm should examine every aspect of their human resources plan. For instance, Figure 1 illustrates the life cycle associated with growing people internally. Whether it relates to the firm’s image among the candidate pool or how managers, supervisors, and associates are continually developed long into their career, it quickly becomes apparent how vast and complicated this component of a strategic plan becomes. Unfortunately, too often, the “circles” become side projects of other roles within an organization. As with many side projects, aspirational goals on planning day become relegated to distractions to “real work” like project management and finances leading to procrastination or neglect. While it is hardly gross insubordination, growing and managing the talent development aspect of a firm could largely be compared to that of growing a safety program or managing IT as a part time job.

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Camera When compared to corollary positions in firms, this does not mean the Talent Director becomes the owner, manager and sole practitioner of all things “People.” Just as safety is everyone “job,” everyone owns an aspect of the People Goal, but the Talent Director is the champion or custodian. They serve as the manager to drive this mission critical initiative and live “People” on a daily basis. They provide the cadence to which the organization marches relative to specific items within the People World:

• Organizational Recruiting—Whether

they actively participate in college or high school recruiting or delegate specific team members to participate (i.e. alumni relations), they quarterback the process to maintain routine contact rather than simply show up only when there is an employment need

• Personnel Development Plans—

Working with managers and associates to tie organizational goals (future management needs) with real-time personnel development and training targets.

• Training— Rather than create a

“blanket” training program, the Talent Director identifies internal needs that not only shore up internal deficiencies but provides real education on new trends and thought leadership within the industry.

• Internal Universities—Acting as “The Dean,” the Talent Director creates the curriculum, identifies the subject matter experts (internal or external) and most importantly creates accountability to drive adherence to training and education.

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Talent development is not just for the mega-organizations. While establishing a full-service university sounds like a daunting task—especially when led by a project manager or superintendent as a side project—consider the benefit of any well-defined, structured training program that is tied to a firm’s strategy and long-term well-being.

Build There are many organizations that are managing the business from the sidelines, determining the long-term efficacy of such a position. Will this work for us? Is the talent issue facing the construction industry a short term blip or is this just the tip of the iceberg? How will we pay for it? First, it is important to push the climatic issue of “talent shortages” to the side for a moment. As a leader in the firm, ask yourself what type of firm you want to lead. Do you want to be a talent for the best or always be an afterthought getting the mediocre? Leading organizations not only state in their vision, mission and core values their dedication to talent but drive real action to achieve in this area. As a result, they are not reactionary pawns to macrolevel forces. It is also important to recognize the need for empowerment. So many firms are well-intentioned when it comes to training and associate development, only to have real life get in the way in the form of projects. How often does a training get “punted” because of a challenging project or performance appraisals delayed because of

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that same challenging project? Similar to safety leadership, the talent director must have cache. If it is not viewed as a true partner to operations, estimating and finance, associates will not only discount the validity and relevance but subvert the intent of the strategic initiative. The construction industry continues to grapple with the ever-changing environment. As discussions continue to leverage technology more and more, the human element remains the one constant in all organizations. Those firm that take an active role in owning and directing the talent development process will certainly surpass those firms that merely dabble from stage left. As a principal with FMI, Tampa, Fla., Gregg Schoppman specializes in the areas of productivity and project management. He also leads FMI’s project management consulting practice. Prior to joining FMI, Schoppman served as a senior project manager for a general contracting firm in central Florida. He has completed complex and sophisticated construction projects in the medical, pharmaceutical, office, heavy civil, industrial, manufacturing, and multi-family markets. He has also worked as a construction manager and managed direct labor. Furthermore, Schoppman has expertise in numerous contract delivery methods as well as knowledge of many geographical markets. He can be reached at (813) 636-1259 or gschoppman@fminet.com.

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Feature How Your Culture Can Impact Safety and Project Delivery—and Ultimately, Your Bottom Line by Kiersten Rippeteau, CODP, Palmer Consulting Group In the construction industry, safety scores and project delivery are often our measures of success. When ratings are high in these areas, lenders trust the business to perform, employees trust the business to take care of them, and owners have a positive experience and are likely to return. In short, safety and project delivery are two of the strongest influencers on your bottom line. You’ve probably been through training programs, organizational change programs, or communications campaigns as part of efforts to improve safety and project delivery. Each of these tools has its place, but what does it take to actually realize these improvements? Is there a silver bullet? If you define “silver bullet” as an easy fix that doesn’t take much time or effort, then no. But if you define “silver bullet” as the one thing that, with commitment and hard work, will have the highest level of long-term impact, then yes—absolutely. And in this case, that one thing is culture. Tools like training or change programs and communications often don’t take into consideration the culture in which they are implemented. A training program will have limited impact in an organization that doesn’t truly embrace a training mentality. Organizational change methods will only go so far if leadership doesn’t support and embrace the change itself. When employees see a clear disconnect between words and actions, communications fall on deaf ears. It takes sustained and consistent behavior from each individual in your 12

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organization to realize the benefits of these tools. And what drives behavior? You guessed it—culture. So let’s talk about how your culture can impact safety and project delivery—and ultimately, your bottom line. In this article, we’ll explore two of your business’s operational levers that can be pulled to influence and shift your culture for increased safety and project delivery successes: Structure and Skills and Abilities.

Culture’s Impact on Safety We know what safety behaviors look like, but how are leaders impacting safety behaviors on job sites when the training is over and carrying out the behaviors matters most? Research published in Safety Science in 2016 tells us that—perhaps more so than safety training itself— management and senior leadership behaviors are keys to developing safe work behaviors on construction sites. Author Jitwasinkul and his colleagues found that when frontline supervisors are seen as “open, approachable, accessible, and helpful, soliciting and following up on workers’ suggestions,” safety behaviors will increase. The question for leaders, then, is what levers can we pull to create a culture that allows our frontline supervisors to be “open, approachable, and accessible?”

Shifting Your Leadership Culture For safety, let’s look at the structure lever. If perceived

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approachability of frontline supervisors dictates safety behaviors, then organizational structure matters. Let’s say your senior leadership team has set the expectation that frontline supervisors are “open, approachable, and accessible” to their people to increase jobsite safety behaviors. Here are some questions you might ask about your structure: • Is the job of a frontline supervisor designed to allow time to be accessible? • Are rewards in place for them to be open to safety concerns from their people, or do current rewards actually incentivize them to ignore safety concerns? • Are there too many layers between senior leadership and frontline supervisors to effectively communicate new expectations? If so, how might that change or what communication channels could be put in place? The structure lever can also impact the level of influence and empowerment your employees have, improving the ability of frontline supervisors to follow up on suggestions. • Is there role clarity so that people know who they should go to if they have a safety concern? • Does the current reward system create incentive or disincentive for team members to address safety concerns? • Do business processes make it easy and timely for senior leadership to act on safety feedback when they receive it?

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As you assess your structure and are able to either affirm it or make changes, you inevitably start to shape your culture. By pulling the structure lever, you can create a culture of “open, approachable, and accessible” leadership that will in turn drive safety behaviors.

Culture’s Impact on Project Delivery In 2015, researchers Loosemore and Lim published a study showing that perceived fairness plays a role in how well people collaborate along the project delivery supply chain. As you can likely attest to, when people collaborate well, jobs are more likely to be completed on time, on budget, and with the expected quality. So how can your organization influence perceived fairness to those you need to collaborate with along the project delivery chain? Pull on the skills and abilities lever. (Let’s clarify that by “fairness” we are not talking about making all players along the project delivery chain happy all the time. Most people understand that some situations will not go their way. They are far more likely to take those situations in stride if they feel they’ve been part of a collaborative process.)

Shifting Your Collaboration Culture The best way to influence perceived fairness to those you need to collaborate with is to ensure the people in your organization managing relationships along the project delivery chain are able to be goalfocused, facilitate tasks, and—quite simply—to be considerate. Equip your people with these abilities, set

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expectations that they are put to use every day, and your culture will do the work for you. Senior leadership doesn’t need to micromanage the field or play relationship referee if you can rely on the fact that your people’s behaviors are consistently aligned with the way you do business. Here are some questions you might ask about whether your organization is equipping your people with the skills and abilities to support perceived fairness and drive collaboration across the project delivery chain: • Is there one clear goal that applies to all projects? Establishing one clear goal for all projects makes decisionmaking and prioritizing straightforward for your people in the field. It creates consistency and transparency, and reduces “emotional decisions” that might get made in the face of tension or conflict. Consistent, transparent, logic-based decisions guided by a single goal go a long way in establishing trust and increasing perceived fairness. • Have you developed your people in the field to be problem-solvers and process improvers? These two skills enable your people to facilitate tasks; to ensure the task at hand is getting done as effectively and efficiently as possible. The investment in these skills will pay dividends in successful project delivery. • Have you enabled your people in the field to be considerate? The truth is, most people are considerate by nature. Unfortunately, some organizations create

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expectations counter to being considerate (e.g., “winning,” maintaining power at all costs, and so on). These expectations create behaviors that break down trust and eventually have a negative impact on project delivery outcomes. Make sure your organization is setting expectations that allow your people to be considerate team players along the project delivery chain, and you are more likely to influence collaboration and improve project delivery.

You Can See Culture You’ve likely heard phrases like, “Culture is elusive” or “You can’t see culture.” However, culture is seen in budgets and in organizational charts; where the organization invests its time and resources. Culture is seen in employees’ and leaders’ actions; how their environment motivates them to behave and how they treat partners and vendors. Because you can see it, you can improve it. Make the effort to pull on these or other operational levers that can improve your culture, and see what dividends it pays for you and your people. Kiersten Rippeteau, CODP, is an OD Business Consultant for Palmer Consulting Group’s Organizational Strategy Group (Palmer OSG). Rippeteau specializes in Organization Design, Organization Development, and Culture for the Construction industry. You can learn more at PalmerOSG.com or contact Rippeteau at kiersten.rippeteau@ palmerosg.com.

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Feature The Disaster Artist—An Examination of What Drives Failing Businesses at Their Peak by Gregg M. Schoppman, FMI

Revenues are blooming, and times are swell for many construction organizations. What could possibly go wrong? Many leaders believe that the most challenging aspect that many firms face is the availability of personnel. However, this movie has played several times before and the conclusion is always the same. Undisciplined management and a complete lack of good strategy leads to failure. In 2007, FMI released a ground-breaking study titled “Why Contractors Fail.” The study was the deep examination of over 30-plus large E&C firms that failed to search for the root causes. While each of the participants had their own reasoning for failure, the major “buckets” could be summarized in three key areas: • Strategic—Unrealistic growth, volume obsession, etc. • Organizational—Poor cash flow, operational inefficiencies, legal, etc. • Uncontrollable—Banking/bonding issues, economic conditions, etc. The fixation with the last item remains a curiosity. For example, many leaders view this item as the primary cause for failure when in fact the first two items—strategy and organizational performance—were the leading cause of failure and these supposed “uncontrollable” were simple exacerbating factors. Put another way, it is always easier to blame the economy than it is poor leadership. Yet, here we go again. Contractors are once again seeing record highs in many categories, both good and bad. With strong revenue comes increased risk due to higher receivables, demand for cash and time. Firms should take stock in their current position and use this internal inventory to benchmark against not

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only the superior firms but also reference their own risk profile.

Talent How often have leaders said, “If we only had more people, we could do X percent more …” In fact, the talent crunch has served as a de facto governor for some firms, allowing them to live within their means. However, it often becomes hard to say no when saying yes to customers feels so good. And thus, the cycle begins. Firms acquire more work and end up shelving their strategic plan on growth and people development in favor of engaging new talent and unproven entities. For instance, Figure 1 is a snapshot of what happens during this process: Revenue growth is not a bad thing. In fact, this engine for growth—when done correctly—is a good thing for the firm and helps the business to growth. As the study indicated, it is the lack of discipline that leads to very reactionary behavior. Of course, the contrarian argument is “How do you say no to a customer?” There is no easy way to say no—whether it is providing a “healthy price tag” or simply being honest with a customer on —but the corollary of failing to execute will often have graver consequences.

also bring in a new set of behaviors and they can also be challenging to break. In the absence of an operational model, free agents will default to their old ways, good or bad. More importantly, without accountability to a firmwide standard, it is easy to rack up losses through poor efficiencies, weak change order

The Playbook Leaders talk about training and development, but this is less about sitting in classroom and more about having a script that the team utilizes to execute. The aforementioned free agents are great in many cases because they bring a new breath of air to the organization. However, they Figure 1

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management and an overall lack of proactiveness. This does not mean that firms shouldn’t train. Rather, it means training should be focused to reinforce the right behaviors within the firm. Training and development should never stop, even when firms are busy. In fact, waiting for slow times sounds counterproductive and once again, reactionary.

It’s All About the Money Cash specifically. Cash is king—that is usually a mantra that is pounded into leaders from surety, banks, financiers, experts, consultants, etc. The drum beat is loud and should resonate clearly but the influx of volume often distorts the view. Working capital should be an element to every leaders’ dashboard but it is often relegated to the margins as the obsession with volume and profitability dominates the landscape. Profitability is extremely vital but without cash

the building becomes a house of cards sitting on quicksand. Firms find themselves sideways as they overextend into their line of credit, loosely manage collections and also see write-downs resulting from poor operational performance. The downward spiral begins to look like the degenerate gambler sitting at the roulette table hoping to see that little ball land on their number. There will also way be economic cycles that will cull out the wheat from the chaff. However, it is ignorant and misguided to blame everything on the external environment. There were countless firms that defied conventional wisdom and thrived during the years of recession. Whether they became lean, mean and efficient or simply had a better strategy, many firms were more profitable during these times of posterity than when volume flowed like a fine wine. Strategy and operational performance should be married and most

New On-demand Video from FASA When it comes to managing your business, the Foundation of ASA is your partner in education. View and listen to FASA’s on-demand videos at an individual workstation or in a conference room for group training. Your order includes access to the on‑demand video any time, and as many times as you’d like! This is just one of the on‑demand videos available through the FASA Contractors’ Knowledge Depot to meet your business management training needs.

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importantly, there should exist a discipline and commitment to avoid the disaster trap. More importantly, it is no fun being a statistic in a case study. As a principal with FMI, Tampa, Fla., Gregg Schoppman specializes in the areas of productivity and project management. He also leads FMI’s project management consulting practice. Prior to joining FMI, Schoppman served as a senior project manager for a general contracting firm in central Florida. He has completed complex and sophisticated construction projects in the medical, pharmaceutical, office, heavy civil, industrial, manufacturing, and multi-family markets. He has also worked as a construction manager and managed direct labor. Furthermore, Schoppman has expertise in numerous contract delivery methods as well as knowledge of many geographical markets. He can be reached at (813) 636-1259 or gschoppman@fminet.com.

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“Electronic Takeoff Software Solutions” (Item # 8126) Moving to on-screen measurement can dramatically improve productivity in many ways. However, there are so many systems out there in the market—how do you know which one will be the right fit for your business? In this video-on-demand, presenter Justin Hobby, Exactal, explores features and functionality that subcontractors should be looking for in an on-screen measurement system. $65 ASA members | $95 nonmembers This and other on-demand videos are available through FASA’s Contractors’ Knowledge Depot.

ORDER C O N T RONLINE A C T O R AT ’ S www.contractorsknowledgedepot.com C O M P A S S O C T O B E

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Feature ‘But Can They Fog a Mirror?’ A Strategic Approach to Recruiting Top Tier Talent by Gregg M. Schoppman, FMI

Hiring talented individuals has become the latest in a long line on routine challenges for many business leaders. “We just can’t seem to find great people …” Whether it is exhausting the new channels of social media or tapping the old relationships in the recruiting world, firms have made it a full-time job to increase the capacity in their personnel pipelines. Too often, the pull of “just in time” labor seems to take precedence, short circuiting the need for process discipline and strict adherence to higher standards. The cost impact of a poor hire can be felt in many forms: • Cost overruns—Labor inefficiencies, rework, cost mismanagement, lost change orders, poor collections, no billings, etc. • Customer impact—Customer attrition, customer mismanagement, personality conflicts. • Cultural misfit—Internal friction, morale depletion. • Lost expenses—Training costs, “learning costs” (routine mistakes that a newer associate might make the first time). In the end, hiring a manager that fails to make the cut can result in costs that may be double to quadruple the simple sunk costs of that person’s salary. This should enough to scare anyone to avoid hiring anyone, but the reality is that bringing on new assets is essential to every business.

While hiring is only one step in the human capital cycle, it serves as a gate mechanism and should be approached with diligence and discipline.

Personnel Strategy It is imperative that a firm answer its own personnel strategy. For instance, what is its approach to human capital? For instance, does the firm approach its talent needs through a greenfield, farm system model replete with rookies or does it tend to source personnel with industry free agents. Many firms most likely use an amalgam of these to supplement their ranks. While sourcing hardly appears to be a major cruxt, it will affect the overall approach to which a firm then develops its talent. For instance, the training and development program that a firm should institute for seasoned free agents should be drastically different than one for rookies. Figure 1 is a simple illustration detailing the potential curriculum of each group: The main theme in the second column is the inculcation of this talented group into the firm’s philosophy and culture. While their building construction skills are commensurate with their industry tenure, there are more ingrained behaviors that need modification.

• Firm Core  Values

Rookie Class • Financial Basics • Building System Integration • The Building Process

Seasoned Free Agents • Successful Culture Connections

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Innovative

• Firm Comparative  Advantage

Customer Service Oriented Commitment to  Safety Honest

Solutions Oriented

• Customer Management

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Customer Centric

Collaborative Processes

Solutions Minded Innovative Team Driven

The other element to examine is the connective tissue between the firm’s corporate values and those of the individual. There are plenty of firm’s that simply adorn their office with placards espousing values but that is where those values end. Firms would be better suited to ensure alignment in their hiring models. For instance, Figure 2 depicts a scenario that demonstrates a stricter alignment: Most of the elements are intuitive. There are probably few examples of firms that seek out someone who is dishonest. The challenge comes when evaluating a talented candidate to ensure alignment. How does a firm hire for honesty, short of connecting a candidate to a polygraph? One avenue to explore is the deeper use of questions that are focused on areas specific to core competencies. Rather than the perfunctory “Tell me about your work history …,” questions dial into these attributes. Such as “Tell a time where you had to truly demonstrate innovation.” However, superficial questions become the go-to playbook, especially when disciplined hiring goes out the window.

Competency-Based Hiring

Competency-based hiring is hardly new. In fact, Michael Lewis, author of The Undoing Project, explores this concept in everything from the NBA Player Draft to analyzing talent for the Israeli military. Firms wrestle with how to drive the right questioning to gather meaningful results. For instance, ask• Individual ing a candidate to detail their Values vast experience is very tangible when compared to asking them how they solved a difficult negotiation. The entire hiring philosophy needs to be flipped on its head, as shown in Figure 3. In fact, the top line should be maintained but simply serve as a filter to get to the next level of screening. For exam• Individual  ple, assuming a project manCore  ager has the applicable level Competencies of experience, the interviews focus on the intangibles. To

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do this effectively, the firm must define success for each position within their firm. What does the best project engineer/manager/superintendent exhibit daily that makes them successful in OUR ENVIRONMENT? See Figure 4. With the core competencies defined, a firm can now articulate the right questions for each interview:

how the candidate responds will provide a brief glimpse into potential sticking points. On the other hand, if a firm was hiring for a “Design-Build/Conceptual Estimator” and the candidate failed to exhibit a comfort level with a competency such as “Dealing with Ambiguity,” the answer might be on the table.

Project Engineer: Intellectual Curiosity • Why did you get into the construction industry? • How do you keep yourself stimulated? • How do you keep up on new trends in the industry?

Construction organizations have begun to add various testing to their cadre of tools. DiSC, Proscan, Myers Briggs, Predictive Index, etc. provide firms a new dynamic with which to gauge personality fit. However, how many firms use these tools to ask the right questions? For instance, in the case of a “Dominant” superintendent, should the following questions be added to the process: • Describe a situation when a subcontractor or tradesperson let you down. • How did you handle the last time you had rework on a project? • How would you define a successful project manager/superintendent relationship? On the surface, a dominant superintendent might be exactly what is required but evaluating the magnitude and depth of that dominance might ensure a cultural match. Additionally, best-of-class firms are now considering other forms of testing to ensure there is capability matching competency. For instance, as is inspired by firms like Google, there is a higher value placed on the use of case studies:

Self-Starter • What type of manager do you require? • What motivates you in your work life? • How do you keep yourself motivated when doing tasks that might not be the most “glamorous”? Solution-Oriented • Tell me about a project you recently completed (at school or work) and what were you solving for. • How do you manage projects in your personal life? Flexible • Describe a time where you were pulled off a project only to start a new assignment. • Describe a management style that frustrates you. Ultimately, the competency will dictate the rationale of questions. In some cases, there are no wrong answers but seeing

Skill Testing

Figure 3

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• Scenarios—Placing the candidate in a routine situation that carefully examines how they solve problems—e.g. Your project is behind schedule and it has had two straight months of margin erosion. The customer has asked you to price an additional scope of work. Describe the strategy and tactics of how you would manage this project moving forward. • Skill Testing—Whether it is a math test for superintendents or a small mock presentation for a business development manager, the firm can grade raw skill in a safe setting. • Critical Thinking Experiments—Much like Google, implement critical thinking skill testing. This becomes less about their answer—which in many cases is irrelevant—and more about HOW they solve problems—e.g. How many golf balls will it take to fill Wrigley Field in Chicago? In the end, the filters and tools abound when it comes to securing the right talent for an organization. However, it comes down to a willingness to adhere to the process and discipline to stick by the results the process yields. Many firms become fixated on a candidate for all of the wrong reasons and they look back at the wake of disaster it caused. There will be plenty of challenges in the hiring process and plenty of lowers slipping through. However, the onus lies on the firm that simply uses the “fog test” to screen talent. As a principal with FMI, Tampa, Fla., Gregg Schoppman specializes in the areas of productivity and project management. He also leads FMI’s project management consulting practice. Prior to joining FMI, Schoppman served as a senior project manager for a general contracting firm in central Florida. He has completed complex and sophisticated construction projects in the medical, pharmaceutical, office, heavy civil, industrial, manufacturing, and multi-family markets. He has also worked as a construction manager and managed direct labor. Furthermore, Schoppman has expertise in numerous contract delivery methods as well as knowledge of many geographical markets. He can be reached at (813) 6361259 or gschoppman@fminet. com.

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Feature Overcoming the Challenges of Finding and Developing Talent in the Construction Industry by Sarah Mueller and Jesus Yactavo, Shapiro & Duncan It’s a theme that has become all too familiar in construction companies these days. You have the work. You have open positions. People are applying. But you can’t find the talent with the technical skills you need. Let’s assume that your company is a mechanical contracting firm that provides cutting-edge mechanical solutions including pre-construction, engineering, construction, design/build, fabrication, installation and maintenance services. This company would have an evergrowing need for senior HVAC techs and journeyman plumbers, pipefitters and welders. These positions require three to five years of experience. To find the right people, and then develop this talent after they come aboard, it takes a multifaceted approach.

Causes of the Construction Talent Shortage With the current unemployment rate at 3.9 percent, the lowest since 2000, virtually everyone who wants to work has a job. This is what economists call a “full employment” economy. This workforce reality is certainly reflected in today’s construction industry. Everyone who is in the skilled trades and is good at what they do is already employed. Nevertheless, the work is out there and contractors are forced to compete for a shrunken pool of qualified talent. While there are plenty of entry-level people in the construction trades job market, a skills gap exists. No doubt, construction is not easy work and that makes it even more challenging to bring people on board. Currently, there are half a million positions that can’t be filled in the construction industry because of the talent shortage. At the same time, increasing numbers of people, especially workers in their 50s and 60s, are retiring from

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the industry. As a result, the construction jobs deficit is expected to increase to 2 million by 2022. Construction companies have to work especially hard to demonstrate to millennials that they offer a great career opportunity and a better place to work. Generally speaking, people born since the early 1980s are expecting advancement opportunities and work/life balance. Millennials are also concerned about career mobility; they don’t want to be stuck in the same position for the next 10 years.

• Active participation in career fairs conducted by high schools, community colleges and four-year colleges. • Emphasis on safety. Nowadays, to attract enough high-quality applicants, construction companies must make safety a No. 1 priority. Maintaining a highly robust safety culture means providing safety training on an ongoing and as-needed basis. This emphasis on safety should be strongly promoted in the company’s recruitment advertising and supporting materials.

Keys to an Effective Construction Recruitment Process

Diversity Matters

Recruitment must-haves for a construction company include all of the following: • In today’s digital world, posting a “Help Wanted” ad in a print newspaper has become obsolete. Instead, creating a strong online presence has become a critical channel to utilize in the recruitment advertising mix. Today’s recruitment advertising channels of choice include Indeed, Monster and even Craig’s List. Job openings should also be posted on a company’s social media channels. In addition, employee searches can be conducted through the LinkedIn Recruiter feature. • A robust applicant tracking system. • Encouragement of employee referrals. For example, an employee who refers a qualified new hire would be eligible for a referral bonus of $250 for an entry-level employee up to $5,000 for the foreman level. For an employee to earn the entry-level bonus, the new hire he or she refers would have to stay for at least 90 days. Larger bonuses would be paid over a one-year period.

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There is no doubt that a diverse workplace fosters a company culture in which different ideas and ways of looking at solutions can flourish. In fact, industry studies have shown that diversity in construction is linked to higher productivity. That is why construction firms should make a concerted effort to increase the number and importance of women in the company—including opening up opportunities for women employees to become members of the corporate leadership team—as well as hire and promote more Latinos and Hispanics. The key to developing a diverse employee population is making connections that build on similar values. Construction companies must build strong partnerships with organizations that support hiring of Latinos and Hispanics, women and people with disabilities in construction. Examples in the Mid-Atlantic region include: • Worksource Montgomery, an organization promoting job training and placement in Montgomery County, Md., in the Washington, D. C. metro area;

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• International Rescue Committee, a Baltimore-based nonprofit that assists refugees from Latin American countries; • Associated Builders & Contractors Women Building Washington committee; • WV Women Work, an organization that promotes hiring of women from West Virginia in construction; and • Seeking Employment Equality & Community, a Silver Spring, Md.based nonprofit that creates employment opportunities for people with intellectual and developmental disabilities. Building strong relationships with organizations such as these requires communication on a regular basis, to make sure the partnership is a good match for your company’s culture.

Keys to Employee Retention In today’s construction industry, as mentioned earlier, it’s hard enough to find high-quality employees. Once that talent is on board, it is critically important to hold on to these employees. That is why employee education and training is such a critically important component of a committed and consistent recruitment process that aims to develop a skilled workforce. Moreover, employee development should be viewed as a strategic priority in the broader effort to develop a strong employment brand. Companies should invest in their employees just as they would invest in the corporate brand. Today, employee development in the construction industry has become all about keeping employee skills current in a business environment where technology is rapidly advancing. This is not your grandfather’s, or even your father’s, construction industry. No doubt, construction is not easy work and that makes it even more challenging to bring people on board. Meanwhile, the rising cost of education is another key factor related to employee recruitment and development in construction firms. A major challenge is heightening awareness among prospective and current employees that it

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is possible for a young person to work hard, earn a living with good benefits and obtain an education that will be of value to them—without being saddled with five or six figures of student loan debt. Apprenticeships, in fact, are like obtaining a four-year degree without the cost. The tradeoff is working fulltime while going to school either a couple of evenings a week or one to two days a month, depending upon the program and employer. For many, this is an appealing blend of classroom instruction and on-the-job training. Prospective and current employees also need to know that they can have mobility within the construction field—that it’s not a dead-end career. In reality, there is always opportunity to evolve your job title and there is substantial room for growth in the field, no matter where the employee starts. For example, with the right blend of education and training, a plumber could become a project manager or an HVAC technician could become an estimator. An apprentice could become a foreman, then an assistant project manager, then a project manager. From there, the career path could lead to project executive and ultimately to vice president. It all depends on the individual’s talent and drive. Thus, providing education and training results in more upward mobility for employees, which in turn opens up more jobs, builds the company and ultimately adds value. Companies that place a high value on employee training and education could even go a step further and provide a tuition reimbursement benefit toward a degree at the local community college, a nearby fouryear university or another institution of the employee’s choice. Two credits per year is a good starting point for a tuition reimbursement benefit. Lastly, construction companies should strongly consider reimbursing employees for the cost of obtaining professional certifications. Whether it involves a skilled trade in which the employee is working on a journeyman’s, journeywoman’s or master’s license, or a skill area in which the employee wants or

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needs a professional certification—such as Design/Build, Leadership in Energy and Environmental Design or Human Resources—certification attests to their ability to handle a certain level of work. Employee certifications also demonstrate the company’s collective ability to perform. It shows that a contractor or subcontractor has the capability to drive the business, to drive projects and to be successful as a team.

Key Takeaways To maximize the efficiency and effectiveness of a construction company’s recruitment and employee development/retention program, here are five things to keep in mind (in ascending order of importance): 1. Work hand-in-hand to develop strong partnerships with employment resource organizations. 2. Maintain an active recruitment advertising presence on Facebook, LinkedIn and other key online employment platforms such as Monster and state job boards. 3. The company’s HR team needs to keep a running tally of jobs that are currently in place and pre-plan what future job needs are going to be— three months, six months, one year and five years out. 4. HR should be actively engaged in the market, know how the economy is doing, and know what your competitors are up to. 5. Make recruitment and employee development a strategic function within the company and allow HR to have a seat at the top leadership table with ownership. Sarah Mueller is director of Human Resources and Jesus Yactavo is the senior Human Resources generalist at Shapiro & Duncan, Inc., a third-generation family-owned mechanical contracting business serving customers in the Washington, D.C., area since 1976. Shapiro & Duncan is the “Provider of Choice” for complex commercial, government and institutional design-build projects that require first-rate performance, work quality and customer service.

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Feature Importance of Keeping Your Employee Handbook Up-To-Date by Jamie Hasty, SESCO Management Consultants Employee handbooks are an important way for employers to communicate rules, expectations, and benefits to employees. They also can serve as a way for the company to establish its brand and convey its history and corporate culture. If the company’s employee handbook is out of date, however, it can become a liability, rather than an asset. With ever-evolving laws and regulations, it is important to ensure that your company’s handbook is compliant with federal, state, and local law. An employee handbook should include statements addressing at-will employment; equal employment opportunity and harassment; work hours; leave under the Family and Medical Leave Act; accommodations under the Americans with Disabilities Act; workplace violence; trade secrets and confidentiality of company information; work rules and the consequences for violating them; and other important issues. But often handbooks include confusing or complicated policies. As you consider simplifying and keeping your handbook up-to-date, consider the following.

Communication Your handbook is an important communication tool. Apart from spelling out the “dos and don’ts,” the handbook can introduce employees to the mission, culture, tone, and management style of the organization. It can be a dry list of rules, or it can personalize a company. It can be a quagmire of information or

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a big time-saver for HR to help employees answer basic questions. How you communicate the information is just as important as what you communicate. Make the tone of your handbook your own and ensure that it covers what is most important to your culture.

Comprehensive Content Employers should continually assess that the handbook makes sense for their workplace. A handbook that is long, poorly organized and full of “legalese” is daunting for HR to update, and unlikely to be helpful to employees. But some legalese is important, such as a prominent disclaimer that the handbook is not a contract, does not guarantee a job for any particular time, does not change the at-will nature of employment, and is subject to change at the company’s discretion. A handbook cannot cover every possible scenario. Include policies that are legally required or encouraged and key company-specific practices. But review periodically to see if a policy can be shorter, clearer, or eliminated. If someone outside of HR reads it, do they agree that each section is necessary, clear, accurate, and relevant?

Current Issues An out-of-date handbook has limited use and can be a legal liability. It is important to capture legal changes affecting your workplace.

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LGBT Protections. Laws continue to expand protections afforded to lesbian, gay, bisexual and transgender employees. Courts have held that LGBT individuals are protected by Title VII’s protection against discrimination “because of sex.” Many states and municipalities also have enacted laws and regulations expanding employment protections to include LGBT individuals. Given this trend, employers should ensure that their equal employment opportunity policies provide equal protection to employees without regard to sex, sexual orientation, gender identity/ expression, or marital status. Moreover, in light of the U.S. Supreme Court’s decision recognizing same-sex marriages, companies are required to provide same-sex married couples with the same benefits as heterosexual couples. Employers should revise their policies on employee benefits and leaves of absence to ensure that same-sex couples receive equal treatment. Pregnant Employees. The Pregnancy Discrimination Act prohibits discrimination based on pregnancy in any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, and benefits. The Act also requires employers to treat pregnancy disability the same as other disabilities for purposes of sick leave and temporary disability benefits. Likewise, employers must provide reasonable accommodations for pregnancy-related

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disabilities on the same basis as they provide accommodations for employees who are disabled for other reasons. Employers should make sure that their EEO policies include pregnancy in the list of protected categories and that their policies on accommodations include accommodations for expectant workers. Dress Codes and Religious Accommodation. Title VII gives religious practices “favored treatment” and “requires otherwise-neutral policies to give way to the need for an accommodation” in the absence of undue hardship to the employer. The U.S. Supreme Court has held that an employer can be liable for failing to accommodate a religious practice, even if the employer lacks actual knowledge of a need for an accommodation. According to the Court, even seemingly neutral policies are not discrimination-proof.

Complaints The #MeToo movement will lead to scrutiny of employer responses to harassment and misconduct. Employers should confirm their commitment to

equal employment opportunity, making sure that the list of protected classes is up to date and includes all other classes protected by law. A handbook should also describe the reporting system, prohibit retaliation, and confirm that discipline will be imposed for breaches of the zero-tolerance policy.

Consistency A handbook should reflect the reality of the workplace and vice versa. Does one department let employees take vacation with one day’s notice, while another department requires two weeks? Are the policies sufficiently clear and comprehensive that they can be enforced uniformly? Consistency will be key if a lawsuit arises. Time spent up front to make sure that a handbook provides a roadmap of appropriate behavior, a complaint process, and proper disclaimers will be important in avoiding and defending disputes. In addition to keeping abreast of new laws, employers with employees in multiple states must consider legal variations in all of the jurisdictions where they do business. Numerous states and

municipalities, for example, have their own paid sick leave rules and family and medical leave laws that go beyond what is required by the FMLA. Employers should be careful to take state and local laws into account when drafting their employee handbook. Jamie Hasty is the vice president of SESCO Management Consultants. SESCO provides results-oriented human resource consulting services to its members. SESCO Management Consultants is retained by ASA to provide HR support on a daily or as needed basis. SESCO also provides services related to employee handbook development and review at discounted rates to ASA members throughout the country. The arrangement provides a free “hotline” to discuss day-to-day employment issues such as policy development, employee challenges such as disciplinary actions, terminations, or workers’ compensation issues, compliance to federal and state employment regulations, and many other management and human resource matters. Hasty can be reached at (423) 764-4127 or jamie@ sescomgt.com.

2018 ASA BEST PRACTICES AWARDS ASA offers national recognition to prime contractors that are committed to superior business practices like prompt payment. ASA’s annual “National Construction Best Practices Awards,” developed by the Task Force on Ethics in the Construction Industry, recognize elite prime contractors that uphold best practices and refuse to do business according to the “lowest common denominator.” The deadline for prime contractors to submit applications is Nov. 2, 2018. The application fee is $495. Each prime-contractor applicant must supply three sealed businesspractices recommendations from specialty trade contractors that have worked for it in the past year, along with a copy of its standard subcontract, with its application. ASA will honor recipients during an awards ceremony at the ASA annual convention, SUBExcel 2019, March 6–9, 2019, in Nashville, Tennessee. Learn more about this award from asaonline.com.

APPLICATION DEADLINE: NOVEMBER 2, 2018

Helpful Links: • Watch the National Construction Best Practices Awards video. • Prime contractors: Download the 2018 National Construction Best Practices Award application form. • Specialty trade contractors: Download the 2018 National Construction Best Practices Award “Form for Evaluating the Applicant’s Business Practices.


Feature Importance of Background Checks and Drug Testing by Adam Kneisley, SESCO Management Consultants A company is only as good as its employees. In an increasingly competitive business environment, it is perhaps more important than ever for employers to exercise prudence and caution in hiring and maintaining their workforce. Background checks and drug testing have become important parts of the hiring process. Failing to conduct background checks and drug testing during the hiring process can be a costly mistake for an employer of any size.

Background Checks Matching the right person with the right position is rarely easy. It’s a little bit of an art and a science, and even candidates with sterling resumes and references aren’t immune from not working out as planned. There are countless reasons why an individual hire might go haywire. Without requiring applicants to undergo a rigorous background check, companies are almost hiring on faith, because they assume everything a prospective employee claims is accurate. That’s a huge assumption to make and one that can have disastrous consequences. Background checks should be a part of every employer’s recruiting and hiring process. The checks can range from consulting with references to checking criminal records. If your employees have contact with the public or financial transactions, you should be particularly thorough about your background checks. A background check is a critical form of risk management for the hiring process. Background checks are an important, cost-effective way for employers to reduce turnover, improve productivity, and reduce legal liability. Conducting background checks provides critical information and demonstrates the employer’s due diligence in hiring and retention. Employers have a duty to provide a safe workplace. Background checks can help keep the workplace safe. In fact, background checks show that the employer has exercised reasonable care and made a diligent search. Legal liability is among the leading reasons to perform background checks. Conducting background checks shows due diligence and helps protect the employer from liability. Screening

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applicants for signs of past unacceptable activity and behavior makes the workplace more secure. Submission of past work history may only show starting and ending dates and duties performed. The employer needs to know more about events between those dates, including actions and activities that could cause issues. The employer has a duty to provide a safe workplace; today this means a place free of violence, threats, harassment, and other unacceptable behavior. Background checks search for information and indications of problems that become causes for terminations: criminal activity related to dishonesty and alcohol or drugs as well as other information. The costs of a negligent hiring suit to an employer can be severe and long-lasting. Conducting background checks can reduce liability, but even more important, it can reduce the risks of harm to the employer’s business, employees, customers, or any other party. The primary goal is to make good hires and retain skilled, productive and experienced employees. While to be successful in a negligent hiring suit the aggrieved party must show the employer had actual or constructive knowledge of the employee’s unfitness, failing to conduct a background check has been held to amount to the employer having constructive knowledge of such unfitness. The old adage that an ounce of prevention is worth a pound of cure applies to background checks. Prevention is far less expensive than fixing a bad hire. The cost of a professional background check is a small fraction of the costs associated with an unwanted termination, particularly a fault-based termination that a background check might have prevented. Cost estimates of unwanted terminations range from part of the annual salary to twice the annual pay for skilled positions in highdemand fields.

risk. According to the National Drug-Free Workplace Alliance, 75 percent of the 17.5 million illicit drug users 18 and over are currently employed. It is recommended that all employers conduct drug testing, and implement strategies to pursue drugfree workplaces. Drug use can impair a person’s judgment and increase safety risks. This is especially concerning in certain industries, such as construction, in which using drugs at work could cause an injury or even a fatality. Employee drug use causes as approximately 50 percent of all onthe-job accidents. Employers are charged with ensuring that employees that perform safety-sensitive or dangerous jobs, like driving vehicles or operating machinery, are performing their job functions in a safe way. Employees under the influence of drugs may struggle to stay on task, letting their minds drift toward problems that aren’t related to their work. Drug testing allows employers to target those employees who aren’t reaching their full potential due to drug use. In so doing, employers will improve their company’s overall performance. Substance abuse or addiction can lead to missed deadlines and decreased attendance. Dwindling productivity will result in lower profits as well. Drug addiction causes up to 40 percent of employee theft, an additional drain on profits. Pre-employment drug testing is a great way to find employees who fit your company’s goals and standards. In addition, it reduces the likelihood that you will have to fire a new employee, allowing you to retain valuable workers and decrease your turnover rate. In some states, workplace drug testing allows employers to decrease their worker’s compensation insurance rates, as well as other costs by reducing on-the-job accidents and drug-related illnesses.

Drug Testing

SESCO offers a variety of services related to employers conducting background checks and drug testing. These services may be customized to meet your organization need and budget. Contact a SESCO consultant today to explore the opportunities for your organization.

Although many aspects of society are harmed by illicit drug use and prescription drug abuse, it is especially detrimental in the workplace. Not only can it lower the productivity and revenue of a company, but it can also place employees at

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Feature Tips Regarding Fully Complete I-9 Forms

by Julie A. Pace and Heidi Nunn-Gilman, The Cavanagh Law Firm Enforcement and penalties have doubled since 2015. Under the Trump Administration, the number of ICE audits has hit a record high. In October 2017, ICE announced that it would quadruple to quintuple the number of ICE audits it would conduct, and ICE initiated over 5,200 audits in 2018. ICE has conducted arrests in conjunction with some of its worksite enforcement audits, having made 594 criminal and 610 administrative worksite-related arrests between October 1, 2017, and May 4, 2018. The Department of Homeland Security Immigration and Customs Enforcement routinely audits the Forms I-9 for companies and can impose civil or criminal penalties for violations. Since November 1986, the Immigration Reform and Control Act has required that employers complete a Form I-9 to verify the identity and employment eligibility for all newly hired employees. IRCA also prohibits discrimination on the basis of national origin or citizenship status. This article does not address the non-discrimination provisions of IRCA, but employers should ensure that their I-9 and new hire processes do not discriminate or treat non-citizens differently than citizens. For example, employers cannot ask for specific documents or additional documents, but must instead accept what the employee provides as one document under List A or one document from List B and List C to complete the I-9 Form. This means it is a violation to say “please show me your driver’s license and SSN card.” The employee chooses the documents to show an employer. The primary defense to a charge that an employer has hired unauthorized workers is that the employer did not have actual or constructive knowledge of the employee’s unauthorized status. Complying with the verification procedure creates a good faith defense to an

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alleged violation. Failing to comply with the verification procedure can create a presumption that the employer had constructive knowledge that the employee is not authorized to work.

Always Keep Current Employees’ I-9 Forms. After an employee has resigned or is terminated from the company, the length of time the company must keep the I-9 depends on the duration of employment. Here is an I-9 retention table:

1. Enter date employee started work:

Add 3 years to Line 1

A:

Add 1 year to Line 2

B:

Enter later date here.

C:

2. Termination date:

Which date is later: A or B?

Store Form I-9 until this date.

The Form I-9 Verification Procedures

I-9 Forms and Pre-Audit Steps to Prevent or Reduce Liability

The I-9 form must be completed after the offer of employment. The employee must complete Section 1 of the Form I-9 on the first day of employment, but the employer generally has three business days after hiring the employee to fully complete section 2. An employer must complete the entire I-9 form by the start of employment for employees who will work three days or less. The List of Acceptable Documents is contained on the final page of the I-9 Form. Note, however, that if an employee uses a List B document and the employer uses E-Verify, then the List B document must contain a photo. The I-9 instructions can be posted with other required employment posters. Both the employer and employee must attest to the Form I-9 under penalty of perjury. The employee verifies their status and that the documents are legitimate. The employer verifies that it has reviewed the original documents submitted by the employee, and that the documents reasonably appear to be genuine and relate to the person presenting them.

Employers should conduct a self-audit or retain legal counsel to help conduct an audit. The first step in a self-audit is to print a list of employees and ensure that the company has a completed Form I-9 for every employee within the retention period (according to the table above). If the company is missing a Form I-9 for any current employer, it should immediately complete a Form I-9 and use current date. If there are errors on the Form I-9, work with legal counsel to determine how to correct the errors. Below are some tips for completing and auditing the Form I-9. 1. Advise supervisors and human resources representatives about the requirements. 2. Note that discrimination on the basis of citizenship is generally illegal. 3. Recognize that employment decisions cannot be made on the basis that an individual’s work authorization will expire at some point in the future. 4. Do not specify for employees what documents need to be presented. Rather, allow the applicant/employee to review the List of A, B and C documents and choose what to present.

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5. Be consistent in applying the verification procedures. Verify each employee’s status in the same manner and at the same time (i.e., the first day of employment). Do not target non-citizens differently. 6. An I-9 Form and employment authorization verification should be completed only after the employee has been hired. 7. Make sure to complete the English version of the Form I-9. The Spanish I-9 is acceptable only in Puerto Rico. 8. Make sure to keep both pages of the Form I-9 together securely. It is permissible to print the I-9 twosided, which would help ensure that the two pages are not inadvertently separated. 9. Make sure your company has established a tickler system regarding the expiration dates of documents, such as temporary work cards, that demonstrate the expiration of an employee’s work authorization. Employers must re-verify work authorization on or before the date that that the original work authorization expires. Companies may want to begin notifying employees six months prior to the expiration date to ensure the employee has sufficient time to obtain a new card. 10. Do not allow an employee with temporary work authorization to work past the expiration date on their employment authorization document or other temporary work authorization card. 11. Employee must complete, sign, and date Section 1. The entire section must be completed by employee (with or without the assistance of a preparer or translator). Section 1 must be completed on the first day of employment. 12. There is no requirement that the employee present any documents to complete Section 1. Employers may not request documents to verify information provided in Section 1. To do so may be an immigrationrelated unfair employment practice.

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13. If the employee does not read English or does not read or write, a preparer/translator can be used to complete Section 1. The employee must sign his or her name. The preparer/translator must also sign at the bottom of Section 1. 14. The employee must check one of the four boxes regarding citizenship in Section 1. If the employee has a permanent resident alien card, the employee should check box 3, Permanent Resident. If the employee has an EAD card, the employee should check box 4. 15. To complete Section 2 of the I-9, the employer must review original, unexpired documents from the employee from the List of Acceptable Documents. No photocopies. 16. If information is missing from an I-9 so it is not fully complete, then complete a new I-9 Form and use the current date on which you reviewed the documents as the date the I-9 is completed, but identify the original hire date for the “employee’s first day of employment” in Section 2. Keep both the original and updated I-9 forms together. 17. Keep I-9 forms separate from personnel files. 18. Make sure that the name on the documents generally appear to match the name the person is using on the Form I-9 and any other employment-related documents. Paychecks should be made payable to the same name used on the Form I-9 and qualifying documents. ICE Notice of Inspection and I-9 Audit ICE initiates an I-9 audit by serving a Notice of Inspection and subpoena. Employers are advised to consult with legal counsel if they receive an audit notice. Always keep copies of everything provided to ICE and obtain a receipt for each individual I-9 provided to ICE.

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After ICE completes its review, it may provide employers a Notice of Technical or Procedural Failures. The Notice of Technical or Procedural Failures identifies technical violations identified during the inspection, often referred to as “paperwork violations.” The employer is then given 10 business days to correct the forms. The Notice of Suspect Documents is one of the most critical notices a company receives. The NSD advises the employer that ICE has determined that an employee is unauthorized to work in the U.S. Currently, the Notice allows the employer up to 10 days from the date of receipt of the NSD to terminate the individuals identified in the Notice, unless the employee contests. When an employee is informed they are on the NSD, ICE provides the employee an opportunity to contest. Sometimes ICE will meet with the employee or ICE may ask the company to obtain additional copies of additional documentation from the individual that can demonstrate work authorization if an employee believes the finding is in error. The final step in the audit is for ICE to issue its findings. If it finds violations, it may issue a Warning Notice, which closes the case with no fines, or a Notice of Intent to Fine, which sets out the violations and proposed penalties. Employers can negotiate a settlement of the fine amounts or request an administrative hearing. The penalties for not completing or not correctly completing a Form I-9 can be steep. Employers, however, may be exempt from fines “technical or procedural” violations if employers made a “good faith attempt” to comply and corrects the technical or procedural failure after being notified by ICE of the error. The exemption does not apply if ICE has discovered the violation, given the employer ten days to cure the violation, and the employer has failed to cure the violation. Also, this exemption does not apply if the employer has engaged in a “pattern and practice” of paperwork violations. The best defense to any liability under IRCA is a fully complete Form I-9.

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The civil penalties for violations of IRCA range from $224 to $22,363. Violations of IRCA can also lead to criminal penalties. Employers who engage in a “pattern or practice” of knowingly employing unauthorized individuals can be subject to civil penalties and imprisonment. Businesses are subject to forfeiture of assets. Julie Pace is a senior member at Cavanagh Law. She concentrates her practice in the fields of employment law, immigration compliance, OSHA, health care, and construction. She defends claims of sexual harassment, employment discrimination, retaliation, whistleblower, and wrongful discharge, and against charges by the EEOC and ACRD. She handles matters involving OSHA, ICE, OFCCP, DOL, NLRB, DavisBacon, FAR, ADA, FMLA, and wage and hour laws, audits and issues. Pace also

handles issues involving the Affordable Care Act and addresses the changes and options it presents to companies. Her Davis-Bacon and prevailing wage practice includes counseling and training on state and federal prevailing wages and benefits requirements, coverage and applicability of prevailing wage laws, coverage exemptions, worker classification and pay issues, addressing wage determinations, wage surveys, and representation of employers before the Department of Labor Wage and Hour Division and similar state agencies. She can be reached at (602) 322-4046 or jpace@cavanaghlaw.com. Heidi Nunn-Gilman is a senior member at Cavanagh Law. She is a member in the Employment, Labor, OSHA, and Immigration Department. NunnGilman’s practice focuses on human resource counseling and employment

litigation. She has extensive experience handling employment immigration compliance strategies, including I-9s, E-verify, ICE and worksite investigations and enforcement under the Legal Arizona Workers Act (LAWA) and similar state and local laws. She regularly advises clients on matters relating to labor and employment law, federal contractor compliance (including Affirmative Action, Davis-Bacon, and federal contractor E-Verify requirements), ADA, Title VII, FLSA, NLRB, FMLA, leaves, drug and alcohol, union matters, wrongful discharge, wage and hour laws for both public and private employers, employee handbooks, confidentiality and non-compete agreements, and executive agreements. She can be reached at (602) 322-4080 or hnunngilman@cavanaghlaw.com.

2018 ASA CERTIFICATE OF EXCELLENCE IN ETHICS ASA will honor selected firms that demonstrate the highest standards of internal and external integrity during an awards ceremony at the ASA annual convention, SUBExcel 2019, March 6–9, 2019, in Nashville, Tennessee. Online Resources: • Watch the Video. • Download the 2018 ASA Certificate of Excellence in Ethics Brochure. • Download the 2018 ASA Certificate of Excellence in Ethics Application. • ASA provides useful model documents to help with your submission and your ethics program. View the 2018 ASA Certificate of Excellence in Ethics Resource Guide. • Download the 2018 ASA Certificate of Excellence in Ethics Timeline.

• ASA’s Certificate of Excellence in Ethics Program Q&A LinkedIn Group—a forum for getting answers to your questions about the application process. This forum includes current recipients who have been through the application process and who are willing to help guide new applicants through their application process. • Recipients of the ‘2017 ASA Excellence in Ethics Award’ may re-apply for the 2018 ASA Certificate of Excellence in Ethics using the Re-Certification Form. • Learn more about this award from asaonline.com.

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Feature Wearables—The Next Wave of Disruption in Construction by David P. Galbraith, Amerisure Mutual Insurance Company Imagine a futuristic construction environment where employees are individually alerted of a hazardous situation, environment or physical position prior to an accident or injury occurring. Then imagine that, a worker’s level of fatigue can be measured, and the worker can be informed that an immediate behavioral change is required to prevent injury. And it would be even more remarkable, if the worker is warned when he or she is too close to moving equipment, leading edges, or dangerous areas. This type of construction site is closer than you might think. Wearable technologies are making a significant splash in the market. They present the opportunity to improve safety, reduce injuries, improve efficiencies, and enhance quality of life for construction workers. While this technology is in the early stages of adoption, it shows tremendous

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promise for companies seeking to improve critical areas that drive efficiency, profitability, and safety. As construction professionals, you might be asked to provide your opinion on this new technology, see a demonstration at a conference, or participate in a pilot program. These requests will increase as wearable technology becomes more prevalent in the construction sector.

Defining Wearable Technology An internet search of wearable technology returns thousands of definitions. The definitions apply to various industry sectors including healthcare, manufacturing, and construction. In order to better understand how wearable technology can help contractors achieve their goals, we must define what wearable technologies encompass for the purpose of this article.

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Amerisure’s risk management team defines construction wearables in the following way: Construction wearables are devices, generally including a computer or advanced electronic device, worn on a construction worker’s body/ clothing/personal protective equipment, designed to collect and deliver data about the surrounding environment, activities, and biometric conditions. The wearable device attempts to improve the quality of life of the construction worker by identifying and warning the employee about the potential for injury, or reducing the seriousness of an injury should one occur. Objectives are achieved by providing portable and timely access to sensors, computers and electronics. The emerging access to multifunctional technology, and its ability to collect and analyze relevant data, is revolutionizing worker protection.

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How Wearable Technology Can Improve Safety Wearable technology will realize its varying objectives in numerous ways. For instance devices: • Can provide audible or vibration alarms to warn workers when they are too close to danger, such as moving equipment or a leading edge. • May warn an individual of a hazardous physical movement—such as bending, twisting, reaching, or lifting. • May caution a worker who is nearing exhaustion. • Can alleviate muscular and skeletal joint stress by assisting with lifting or working overhead. • In emergency situations, can alert emergency personnel, and lead rescuers to an injured worker’s location.

Types of Wearables Predictions identify the widespread use of wearable technologies in construction over the next seven to 10 years. Currently, several technology and insurance companies are partnering with contractors to run pilot programs that test various types of wearables. Typical types of wearables currently being piloted, or in limited use on construction sites, include: • Visual wearables—wearables that use optical aids in/on glasses, visors, and hard hats to produce images for remote viewers and/or the wearer. Visual wearables can bring value to training, troubleshooting, quality control, and other situations where visual representation of a concept is needed. This type of wearable connects field employees to remote technical/supervisory employees, allowing both parties to view items simultaneously. Sharing/overlaying visual information can enhance instructions, training, and verifying materials. Moreover, field workers’ hands remain free to work, while discussing solutions or working

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through an issue. • Tactile wearables—wearables that work as an exoskeleton to increase the user’s strength and durability. Tactile wearables are designed as exoskeletons that provide extra strength or endurance to the wearer. They also limit the force on the wearer’s muscular skeletal frame. Force is constantly monitored and the wearable responds to protect the wearer. The potential for strains, sprains and back injuries can be reduced, while simultaneously increasing a wearer’s capacity and endurance. • Sensing wearables—wearables that can sense a worker’s biological, environmental and physical conditions. In addition to sensing conditions, the device analyzes data using edge computing, and warns the employee of hazardous situations that can lead to an injury. Sensors come in many forms including badges, actuators, bio sensors, gyro scopes, etc. They record and evaluate a wearer’s physical condition, location and the environment around him or her. These wearables can sense location, impact, motions, temperatures, vital signs and blood gases, while they evaluate and interpret the data to provide actionable information. Sensors also can be deployed in numerous configurations that make wearing them simple, easy and unobtrusive. Methods of deployment can include attachments to hard hats, safety glasses or personal protective equipment. Clip-on wearables can be attached to shirts, vests and belts. Edge computers can be contained in wrist bands or clip-on devices. Wearables can also be embedded in the soles of shoes or worn as insoles. Wearables not only have value for individual workers, they can enhance a company’s ability to manage safety experiences, as well. Most wearables feed data to customizable dashboards, which allows leadership to view and evaluate performance data associated with the entire

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organization, specific jobsites, job categories, job functions and employees. This data, and subsequent analysis, helps identify specific areas of exposures that have the potential to increase injuries. It also provides the opportunity to alter operations prior to accidents or injuries occurring. The predictive analytics produced by wearable devices, combined with behavioral changes by employees, and corrective measures by leadership, present new opportunities to significantly reduce injuries to construction workers.

Implementing Wearables in Your Organization The data an organization desires should determine the wearable technology it chooses. For example, an organization concerned with the stress and strains of heavy overhead work may investigate exoskeleton wearables. Those concerned with material handling exposures may utilize biomechanical wearables. When the location of employees and their physical health is critical, biometric wearables may be more desirable. One of the easiest ways to introduce wearables to an organization is to participate in a pilot program. Many insurance carriers offer pilots through affiliated agencies. Costsharing, brand-recognition, and industry expertise are just a few of the benefits of participation. The wearables wave is approaching quickly and gathering speed. As jobsite connectivity, data aggregation, and edge computing evolve, wearables will become more prevalent. Every contractor should be actively investigating and evaluating how this wave can enhance their business. David P. Galbraith is the assistant vice president and risk management technical lead for Amerisure Mutual Insurance Company. He is responsible for the identification, research, development and implementation of risk management technology programs, and associated vendor management.

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Feature The Reefer Revolution: The Impact of Marijuana in the Workplace by Mary E. Buckley, Cross, Gunter, Witherspoon & Galchus, P.C. “Mary Jane, oh Mary Jane. You conquered me like Charlemagne” —“Reefer Madness: The Movie Musical,” by Kevin Murphy, directed by Andy Fickman, produced by Andy Fickman, Kevin Murphey, and Dan Studney, 2005.

There are over 420 songs and over 120 movies about and/or with marijuana. From 2005-2012 there was a popular Showtime series where the main character sold marijuana in an upscale suburban neighborhood, aptly called “Weeds.” Eleven former U.S. presidents have smoked marijuana. Canada recently declared marijuana legal nationwide. Coca-Cola is considering a move into cannabis-infused beverages. Lagunitas, a craft beer label of the brewing giant Heineken, already has a drink infused with tetrahydrocannabinol, better known as THC (that ingredient that produces a high). Eight states plus the District of Columbia have legalized recreational marijuana. Thirty states plus the District of Columbia have legalized the use of marijuana for medical purposes. Weed rules the world, or so it seems, as cannabis companies are even buying entire towns to create tourist destinations. “The Times They Are a Changin’” —Bob Dylan, “The Times They Are A Changin,’” The Times They Are A-Changin’, Columbia Records, 1964.

The widespread legalization of marijuana, whether recreational, medical, or both, is a reality that employers must face. With polls showing that 64 percent of Americans support making recreational marijuana use legal and around 90 percent support for allowing medical marijuana, lawmakers are increasingly realizing the public supports marijuana policy reforms. Reforms take the form of state constitutional amendments, voter ballot measures, and legislative action. In January 2018, Vermont became the

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first state to legalize marijuana legislatively, and the New Hampshire House of Representatives approved a similar bill. Vermont’s new law, which took effect on July 1, allows adults to grow and possess a limited amount of marijuana, while a task force continues to explore regulating and taxing sales. Meanwhile, New Jersey’s new incoming governor has made legalizing, regulating, and taxing marijuana a goal of his administration, and the Northern Mariana Islands (a U.S. territory) Senate and House voted for bills to legalize and regulate marijuana for adults and patients. Several other states considered allowing medical marijuana or replacing possible jail time with fines for marijuana possession. In a handful of states, voters themselves are deciding marijuana policy. On June 26, 2018, Oklahoma voters approved a medical marijuana ballot initiative. On November 6, 2018, voters in Michigan and North Dakota will consider initiatives legalizing and regulating marijuana for adult use. Also on Election Day, voters in Utah and Missouri will decide the fate of medical marijuana ballot measures. Ready or not, marijuana is entering the work place and complicating matters for employers. “I was gonna go to work but then I got high. I just got a new promotion but I got high. Now I’m selling dope and I know why (Why man?) Because I got high. Because I got high. Because I got high…” —Afroman. “Because I Got High.” Because I Got High, T-Bones Records, 2000

In 2010, the Department of Justice estimated that the economic cost of alcohol and drug abuse is $215 billion annually. The Department of Health and Human Services found that 13.1 million drug abusers were employed in 2007. A

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private study conducted in 2015 found that the percentage of employees testing positive in post-accident urine testing has been increasing. As only 20 states remain with no form of legalized marijuana, employers should be prepared to address the complex workplace issues that will inevitably arise as employers seek to juggle newly created protections for marijuana users with maintaining a safe and productive workplace. An employer should treat the recreational use of marijuana, as in the use without being “registered” as a cardholder or medical marijuana user, as it treats recreational alcohol use, with the additional understanding that unlike alcohol, marijuana is still illegal under federal law. Therefore, even though recreational use of marijuana may be legal in that state, employees can be terminated for recreational use, if such is a violation of the employer’s policy, without the employer liability. The question remains, however, regarding what medical marijuana means for the workplace and/or a company’s drug testing policies. As President Clinton said “it depends upon what the meaning of the word ‘is’ is.” As in answering the question is not easy as employers would hope. The answer will depend on the medical marijuana legislation in the state(s) in which the company does business, the company’s substance abuse policy, and the company’s temperament on the same. In the backdrop, ever present, is federal law, which continues to classify marijuana as a highly controlled, Schedule I drug. While the Department of Justice has allowed states to legalize marijuana for medicinal and recreational use, marijuana remains an illegal drug under federal law. Thus, federal grant recipients and contractors must adopt a zero-tolerance policy for drug use and certify that

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the workplace is drug free. Moreover, for employers in safety-sensitive transportation industries, the Department of Transportation has made it clear that a state issued marijuana license is not a valid medical explanation for a positive drug test result. Accordingly, the DOT expects that medical review officers will treat marijuana, whether used recreationally or medicinally, as a Schedule I illegal drug. Some good news for employers is that DOT regulations will also apply for employees not regulated by the DOT, as most MROs will follow the testing guidelines established by the DOT for all drug testing. This means that even when an employee informs the MRO that he or she is a registered card holder, the MRO will report the test as positive, and will include some notation of the employee’s claimed medical use. Most individuals certified to use medical marijuana will be so certified because they suffer from a condition that may also be a disability. Under the Americans with Disabilities Act, “qualified individuals with a disability” are protected from discrimination and are entitled to reasonable accommodation. However, a person who is “currently engaging” in the illegal use of drugs is not a “qualified individual with a disability.” As the ADA is a federal law, and marijuana is still illegal under federal law, the ADA would not serve to protect the marijuana use. Employers should note that some medical marijuana states afford protections to registered medical marijuana users and those protections may require employers to engage in an interactive process, practically identical to that required under the ADA, to see if a reasonable accommodation can be made for that employee under the circumstances. This means that if an employee in one of these states, such as Arkansas or Massachusetts, is using marijuana with a medical card, employers cannot fire them merely on that basis. In other states, like California, employers do not have to make accommodations, even for off-duty medicinal use. Thoughts and attitudes about medical marijuana use are changing, and as thoughts evolve so could the case law in states like California and other states without employee protections. An underlying issue is that a medical marijuana cardholder may have an independently

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qualifying medical condition. Therefore, employers aware that an employee is a registered medical marijuana card holder may want to engage in an interactive process even if it’s not required by law. It is important to note that employers do not have to tolerate on-the-job intoxication even if a worker is using marijuana for medical reasons, so accommodations might include additional time off or a leave of absence for the period the worker needs to use the drug. Workplace policies should clearly state that employees cannot be drunk or high at work. “Let’s just light it up and see what happens.” — Tommy Chong

Employers should also be aware that testing positive for marijuana under some drug tests, such as urinalysis, does not necessarily prove that the employee was “under the influence.” Metabolites of marijuana may remain in the user’s system for weeks after use, well after the effects of impairment have worn off. This is important because, under some state initiatives and marijuana laws, an employer would likely be required to prove that an employee either used marijuana on the job or showed up to work “under the influence” before taking adverse action against the employee on the basis of medical marijuana usage. A positive marijuana drug test without additional proof of impairment will likely be insufficient to prove that an employee was “under the influence.” How will employers prove that an employee is “under the influence”? Will employees be able to bring wrongful termination claims under the initiative’s broad civil protections and non-discrimination clause? It is highly likely that they will. Will a positive marijuana drug test result be sufficient to disqualify an employee from receiving unemployment benefits or workers’ compensation benefits? Will employers be required to pay for medical marijuana treatments as part of workers’ compensation? Courts in some jurisdictions with medical marijuana laws have addressed these concerns, and while most have ruled in favor of employers, other state marijuana initiatives create relatively robust protections for employees. To further muddle the mess, there have been

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courts in those states with protections for medical use that have addressed the issue and ruled against the employer. Consequently, there is no way to accurately predict how courts in those states will choose to interpret the language of the initiatives moving forward. “Last dance with Mary Jane One more time to kill the pain” —Tom Petty & the Heartbreakers. “Mary Jane’s Last Dance.” The Greatest Hits, Musical Corporation of America, 1993.

Despite the uncertainty surrounding these issues, proactive employers can take steps to ensure that they do not run afoul of a state’s marijuana laws while maintaining a safe, productive workplace. Employers should keep abreast of developments in the laws governing these issues, including laws on drug testing. If appropriate, employers can adopt a pre-duty prescription medication and impairing effects substances safety policy with a third-party drug testing lab. Further, employers can update job descriptions and adopt a fitness-forduty policy to reflect the essential job functions of each position and include language requiring employees in safetysensitive positions to have the ability to work in a constant state of alertness and in a safe manner. Employers may adopt an ADA compliant handbook policy on reasonable accommodations. Finally, employers can train supervisors to spot and document objective, observable symptoms of potential marijuana impairment. Whatever steps an employer chooses to take, it is imperative that employers make their position of marijuana clear to employees. The laws on medical marijuana in the workplace are constantly evolving, but courts in states that have had to address these types of issues tend to favor employers who are aware of the law and make a good faith effort to comply with it. Mary E. Buckley is an associate with Cross, Gunter, Witherspoon & Galchus, P.C., in Little Rock, Ark. She can be reached at (501) 371-9999 or mbuckley@ cgwg.com.

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Feature AIA or ConsensusDocs Contracts: Which Standard Construction Contracts Are Best for Your Project? by Brian Perlberg, ConsensusDocs Success on a construction project can rise or fall on the contract you choose. Remember, financial solvency often depends on it. If just one contract out of 10 goes bad, this might lead to a general contractor shutting its doors. I’m often asked why should I choose ConsensusDocs over American Institute of Architects standard construction contract documents? While many express dissatisfaction with AIA contracts to me, they often say it’s the devil they know (and make extensive changes). This article points out the fundamental differences between ConsensusDocs versus AIA contracts and how making a few word changes might not address the fundamental differences.

Mission The American Institute of Architect’s mission includes “to organize and unite” and “promote” the architectural profession. The AIA’s contracts show a bias toward architects. AIA contracts give architects a disproportionate share of decision-making authority without the same level of responsibility. ConsensusDocs’ goal, on the other hand, is to write fair contacts that advance better project results. Fairness stems from neutralizing bias by giving all the stakeholders to the A/E/C industry an equal voice to the drafting table.

Communications Historically, AIA contract documents funnel all communications through the architect. The AIA A201 General Conditions is for a contract between an owner and contractor, and yet the most prevalent word is architect. When coupled with an AIA agreement, the word architect appears 400 times. Historically, the owner and contractor were NOT supposed to communicate directly with one another, but ONLY through the architect. Thankfully this obstacle has finally been removed in 2017, but the basic structure remains.

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ConsensusDocs emphasizes positive and direct party communications. Parties are encouraged to speak directly to one another, early and often in the project to facilitate a positive relationship. Electronic communications are recognized as an effective means of communication in notice provisions as well as for use in project administration though documents such as the ConsensusDocs Electronic Communications Protocol.

Role of the Owner, Passive Check-Payer or Decider AIA documents demote the owner into a passive project role. An owner’s main function is to do one thing— write checks. Beyond that, the message in the AIA B101 Owner/Architect agreement and AIA A201 General Conditions Document is the architect knows best— and owners need protection from the contractor, who should be kept at arms-length. ConsensusDocs gives owners an active role. After all, an owner has the most to gain or lose in the success of the construction project, which ultimately is the owner’s capital asset. An owner may delegate its authority to an outside architect, such as approving change orders, but decision-making authority defaults to the owner. All decision making doesn’t default to the architect. Keep in mind that an owner might have an internal construction manager or hire a construction manager externally, which would certainly change the equation.

Project Financial Information and Sharing Information ConsensusDocs allows a builder to request and receive project financial information before and during construction. ConsensusDocs provides the industry’s only standard questionnaire and guidelines to help ask reasonable

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questions about project financing. AIA restricts access to receive financial information once the project commences. Under AIA, the default for commencement of the project is the date of contract signing, which is before dirt is even moved. Thereafter, a contractor must show a reason (as determined by the architect) to receive financial information. The consequences for not receiving reasonably requested information is not clear because new AIA language in this section is vague.

Writing Style The ConsensusDocs are written from the perspective that good legal writing is simply good writing. Contract language with a clear and concise language helps the parties understand, administer, and interpret the contract. A distinguishing feature in ConsensusDocs is the integration of the general terms and conditions and the agreement into one document. This avoids the two documents from conflicting and avoids confusion. Provisions are written so that the responsibilities and obligations, such as indemnification, are reciprocal on both parties in a consistent fashion. What is good for the goose should be good for the gander. Over ConsensusDocs’ 10-year history a great deal of effort has been made to refine the language and make sure it is consistent in style and even placement throughout the family of 100-plus contract documents. ConsensusDocs comprehensively revises its documents once every five years but also has the flexibility for discrete revisions typically based on changes to case law or the insurance market. Timely updates keep users from being out of date and exposed. AIA contract documents are updated once every 10 years. Given their long history, AIA’s substance and language style is slower to change. The

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substantive terms are not always consistent when comparing an architect’s responsibilities and a contractor’s. An architect’s services are at times aspirational or silent in regard to clear consequences for not performing completely or in a timely fashion. Conversely, obligations falling on the contractor come with hard deadlines and broad consequences, especially when such obligations coordinate with an architect’s responsibility. One example is a contractor’s obligations to provide a submittal schedule, and unclear consequences for not processing submittals in a timely fashion.

Case Law and Litigation AIA has published contract documents since 1888. AIA documents, old and new revisions, generate a great deal of case law and decisions interpreting the language in the documents. There are entire case law books devoted to the cases generated by litigated projects using the AIA contract documents. AIA touts the breadth of case law associated with AIA contract documents. ConsensusDocs has been around for over 10 years. Billions of dollars have been put in place using the documents. Not one reported case has been generated using ConsensusDocs. ConsensusDocs touts the infrequency of projects that fall into litigation using their documents.

Dispute Mitigation Vs. Dispute Escalation AIA’s first line of disputes is through an initial decision maker, which defaults to the architect. Architects are not trained to serve in a quasi-judicial role, but the AIA contracts thrust an architect in the role of judge, jury, and executioner, even if they are not interested in many small decisions monitoring contract administration. According to the AIA, the architect serves as the IDM on almost all projects. And even if the architect isn’t the IDM, architects retain authority to make certain decisions regarding design intent. Moreover, the IDM process is complex with technical timing requirements to finalize IDM

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decisions that have important consequences that might get easily overlooked by some parties. ConsensusDocs utilizes an innovative tier approach that requires the parties to talk with each other at the project and senior project level to mitigate claims before they are escalated to a formal claim. ConsensusDocs also employs innovative dispute mitigation techniques in calling out options for a project neutral or a dispute review board which have proven to be effective on projects that can afford to carry the cost. ConsensusDocs even publishes two standard DRB agreements to implement DRBs.

Design Documents The AIA B101 Owner/Architect Agreement strongly protects architects’ interests in their intellectual property in design documents. If there are any disputes or potential disputes between the architect and the owner, the architect can stop the project in its tracks from advancing, unless and until full payment for services are rendered and a blanket waiver favoring the architect is given. Protecting an architect’s IP rights takes precedence over advancing a project forward. AIA forbids an owner from using design documents on a future project, even renovations, unless the architect is involved. An architect is “entitled to rely on, and not be responsible for the accuracy, completeness, and timeliness of services and information furnished by Owner.” The owner may not rely upon the design professionals provided information in a reciprocal manner. An owner’s protection rests upon the architect’s standard of care, which is a different and lower standard. Commenters have cautioned owners from basing their Owner/Architect agreement on an AIA document because AIA’s mission is to protect and promote the architectural professional. The view that AIA documents are owner-friendly is considered a myth. ConsensusDocs 240 Owner/Design Professional Agreement takes a balanced approach regarding a design

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professional’s IP rights and an owner’s need to build or renovate a project. An owner is allowed to continue a project if there is a dispute between the owner and architect provided payment for services performed has been paid. An architect retains their claim rights. Additionally, there is an option (although it is not the default) for an owner and architect to mutually agree for an owner to use the design documents for future projects along with a waiver of claims to the architect, if the architect is not involved in that future work. The ConsensusDocs architect agreements provide the owner with construction phase design documents that are sufficient “to bid and build the work.” Reciprocally, the design professional may rely upon the design services provided by others. Unbuildable design documents are the equivalent of pretty pictures. ConsensusDocs provides owners a balanced architectural agreement that isn’t written by an architectural association.

Conclusion Now with a 10-year track record, ConsensusDocs provides an industrywide developed and endorsed choice for standard design and construction contracts. ConsensusDocs takes a plain English and fair to all parties’ approach. ConsensusDocs encourages direct party communications to build positive collaboration. Owners gain more control and an active say in their projects. Constructors are viewed as problemsolvers rather than problem-makers. AIA provides a more traditional approach that gives architects more control. Architects make most decisions and protect owners from potential contractors’ abuses. AIA contracts’ long history and usage is well known with a history of litigation and case law. As successful projects trend toward collaboration, your contracts should reflect the business relationships you want to build so you can build better. Brian Perlberg is the executive director and senior counsel for ConsensusDocs.

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Legally Speaking

Davis-Bacon Audits by Julie A. Pace and Heidi Nunn-Gilman, The Cavanagh Law Firm Companies doing business with the U.S. government or on projects that are funded by federal loans or guarantees are subject to numerous additional legal requirements, including compliance with prevailing wage and fringe benefits under the Davis-Bacon Act or Davis-Bacon Related Acts. The potential liability for violations of the DBRA can include debarment from Federal contracting.

Davis-Bacon and Related Acts The DBRA requires the contractor and subcontractors to pay laborers and mechanics employed on the contract and working on the project site no less than the local basic wage and fringe benefits (collectively called the “prevailing wage”) for similar work on similar projects in the area. The Department of Labor determines the prevailing wage for each location and each job type and publishes the “Wage Determination” for each area and each project type online at www.dol.gov. The applicable wage determination is required to be incorporated in covered contracts, and after the contract starts the wages applicable to the project generally will not change, even if a new wage determination issued. In addition to paying the prevailing wage, the DBRA requires contractors to keep certain records, post notices, and include certain provisions in all subcontracts.

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Classification of Employees Working on a Covered Contract The prevailing wage required to be paid to employees on the site of work is based on the classification of the work they are performing. The DBRA does not contain standard classification definitions for employees. Instead, questions regarding the proper classification of work are determined by the local custom or practice for categorizing laborers who perform the duties at issue. The relevant local custom is that of similar projects (same type of construction) performed in the same county during the year prior to the wage determination lock-in date for the contract. Using the wrong classification for the work performed is one of the most common and costliest errors under the DBRA. When there is a question regarding the proper classification of work, DOL may conduct a limited area practice survey by contacting local unions or private shops to determine how they classified individuals performing the work in question. For example, if there is a question of whether individuals installing a metal roofing system should be classified as roofers or metal workers, DOL may call local unions and/or local businesses who install metal roofing systems to determine how they classify and pay the employees installing the metal roofing system. If there is no classification on the Wage Determination that fits the work being performed, then the employer can request

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a “wage conformance” to determine the wage rate and fringe benefits for the worker. A conformance can be requested if the work to be performed by the classification requested is not performed by a classification in the wage determination; and 1. The classification is utilized in the area by the construction industry; and 2. The proposed wage rate, including bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination. The Wage and Hour Division may approve, modify, or disapprove any proposed conformance. Contractors should review the classifications on the Wage Determination prior to bidding to determine the proper classification and whether a conformance is needed. If a conformance is needed, it should be discussed with the contracting agency and requested before work begins.

Basic Rate Plus Fringe Benefits There are two elements to the “prevailing wage”—a basic hourly wage and fringe benefits, both of which are listed in the Wage Determination. The total value of the hourly rate plus the value of the fringe benefits comprises the “prevailing wage.” The prevailing wage obligation may be met by a combination of cash wages and “bona fide” fringe benefits provided by the employer.

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Travel time and lodging are not part of the prevailing wage requirement, but DOL has taken the position that the employer may be required to satisfy an employer’s prevailing wage obligations if employees are required to travel overnight to perform work on a Davis-Bacon covered project. The total prevailing wage (including fringe benefits) may be paid entirely as cash wages or by any combination of cash wages and the value of “bona fide” fringe benefits payments made by the employer. Under DBRA, monetary wages paid in excess of the hourly rate may be used as an offset or credit toward satisfying fringe benefit obligations and vice versa. Overtime is paid at a minimum of one-andone-half times the basic hourly rate. Fringe benefits must be paid for all hours worked, including overtime, but the fringe benefit amount can be excluded from the half-time premiums due as overtime compensation, as long as the half-time premium meets or exceeds one-half of the basic hourly rate. Example: A Davis-Bacon wage determination requires: Basic hourly rate $15.00 Fringe benefit $1.00 Total prevailing rate $16.00 The contractor can comply by paying: 1. $16.00 in cash wages; 2. $15.00 plus $1.00 in pension contributions or other “bona fide” fringe benefits; or 3. $14.00 plus $2.00 in pension contributions or any combination of “bona fide” fringe benefits. In this case, overtime must be paid at one-and-one-half times the basic hourly rate of $15.00.

Example: An employee worked 44 hours as an electrician. The wage determination rate was $12.00 (basic hourly rate) plus $2.50 in fringe benefits. He would be due: 44 hours x $14.50 $638.00 (straight time pay) 4 hours x ½ ($12.00) $24.00 (overtime pay) $662.00 No credit may be taken for any benefit required by federal, state or local law, such as: 1. Workers’ compensation. 2. Unemployment compensation. 3. Social security contributions. 4. Paid sick leave required by state or federal law. 5. Certified payroll reports. Contractors must submit certified weekly payrolls in a form that will satisfy the DBRA regulations at 29 C.F.R. Parts 3 and 5.

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The DOL has created a certified payroll form, WH-347, which satisfies the requirements of the certified payroll regulations. The use of the Form WH-347 is not mandatory, but is made available as a convenience to the contractor and the contracting agency. There are also numerous electronic systems on which employers can create the certified payroll reports, and some contracting agencies have begun to require the submission of electronic certificated payroll reports.

Davis-Bacon Requires Specific Contract Provisions to Subcontractors The bid specifications and the federal contracts are required to contain specific provisions identifying the prevailing wage requirements for the contract so that bidders will know in advance what wages will be required on a DBRA-covered project. Contractors are then required to include this language in all subcontracts, this is sometimes referred to as including the “flow down” language from 29 C.F.R. § 5.2(f). If the required Labor Standards Clause and Wage Determination are not included in each subcontract, then the higher tier contractor can be liable for any DBRA violations committed by subcontractors, as well as facing penalties for not including the required contract provisions.

Posting and Record-Keeping Requirements Under the DBRA, contractors and subcontractors must maintain the following records identified in 29 C.F.R. § 5.5(a) (3). These records are required in addition to the records required by the Fair Labor Standards Act. Covered contractors also must post a notice to employees that they are subject to the Act. The applicable prevailing wage rates must be posted with the DOL poster.

Penalties for DBRA Violations The DBRA is enforced by the DOL Wage and Hour Division and/or the contracting agency responsible for the federal contract. At the conclusion of an investigation, the federal contracting agency or DOL will hold a final conference to discuss the findings of the investigation. If back wages are owed, the federal contracting agency will request that the contractor pay back wages. If the employer is a subcontractor, the prime contractor may be required to make back wages payments if the subcontractor refuses. If there is no agreement to pay back wages, the contracting agency or DOL is allowed, after notice to the contractor, to

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withhold a portion of the payment due to the federal contractor under the contract at issue or any other federal contract with the same contractor or any other federally-assisted contract subject to the DavisBacon prevailing wage requirements that is held by the contractor, in an amount considered necessary to pay the full amount of wages required by the contract. DOL or the contracting agency will use the withheld funds to pay the employees the back wages that they believe are due. Debarment is considered if the violation of the Davis-Bacon Act was “in aggravated or willful violation of the labor standards provisions.” A federal contractor may be debarred for a period of up to three years. The payment of back wages does not eliminate the possibility of debarment. Debarment is most often considered in cases where (1) the contractor has submitted false certified payroll records, (2) the contractor required kickbacks of wages or back wages, or (3) the contractor has committed repeated DBRA violations.

DBRA Pitfalls Failure to properly classify employees is a common error. The contractor cannot classify a pipelayer as a laborer in order to avoid paying the higher pipelayer prevailing wage. Each employee must be accurately classified and paid according to the prevailing wage for their job classification. The use of the “laborer” classification is always closely scrutinized by DOL and is strongly disfavored. Additionally, contractors must use care not to classify workers as an apprentice or helper in order to pay them a lower prevailing wage. Another common problem is failing to pay the fringe benefit equivalent if the actual fringe benefits provided by the employer are not of a value equal to the fringe benefit required in the prevailing wage. Failing to submit the certified payroll as required can also subject a contractor to liability and is one of the most common errors by companies working on federal contracts, particularly subcontractors. Other issues that may trigger an audit and violations include but are not limited to: paying cash; failing to maintain accurate time records, including time cards completed and signed by the employee; failing to keep daily time records; and failing to pay short term employees the required DBRA prevailing wage. Even if an employee works on the job site for just one day, that one day must be paid at the DBRA prevailing wage.

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ASA/FASA Calendar April 2019

13 — Webinar: “The Soft Side of Scheduling: Improving Communications Between GCs and Subcontractors” presented by Steve Groth, Chiaramonte Construction

9 – Webinar: “Avoiding Predatory OCIPs, CCIPs and Builders Risk Insurance Flow-Downs” presented by Jonathan Mitz, Ennis Elecric May 2019

December 2018 11 — Webinar: “Improving the Change Order Process” presented by Ron Churchey, Shapiro & Duncan

14 — Webinar: Corporate and Individual Tax Planning Under the New Tax Law, by Thomas B. Bailey, CPA, CVA, Councilor, Buchanan & Mitchell, P.C.

January 2019 8 — Webinar: “Work-In-Progress Reporting” presented by Stephen Blankenship, Ennis Electric February 2019 12 — Webinar: “The Best—and Worst— Construction Legal Decisions of 2018” presented by Adam Harrison, Harrison Law Group March 2019 6–9 — SUBExcel 2019, Nashville, Tenn. 19 — Webinar: “Lean Construction— What Subcontractors Need to Know” presented by Lean Construction Institute

Legally Speaking (continued from page 35) Julie Pace is a senior member at Cavanagh Law. She concentrates her practice in the fields of employment law, immigration compliance, OSHA, health care, and construction. She defends claims of sexual harassment, employment discrimination, retaliation, whistleblower, and wrongful discharge, and against charges by the EEOC and ACRD. She handles matters involving OSHA, ICE, OFCCP, DOL, NLRB, Davis-Bacon, FAR, ADA, FMLA, and wage and hour laws, audits and issues. Pace also handles issues involving the Affordable Care Act and addresses the changes and options it presents to companies. Her Davis-Bacon and prevailing wage practice includes counseling and training on state and federal prevailing wages and benefits requirements, coverage and applicability of prevailing wage laws, coverage exemptions, worker classification and pay issues, addressing wage determinations, wage surveys, and representation of employers before the Department

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June 2019 11 – Webinar: “A Small Business’ Guide to Human Resources” presented by Jamie Hasty, SESCO Management Consultants July 2019 9 – Webinar: “Emerging Technologies— Smart Tools, UAVs and Others—and How They Relate to the Internet of Things” presented by Maxim Consulting Group August 2019 13 – Webinar: “Trade Shortage” presented by Michael Brewer, The Brewer Companies

of Labor Wage and Hour Division and similar state agencies. She can be reached at (602) 322-4046 or jpace@cavanaghlaw. com. Heidi Nunn-Gilman is a senior member at Cavanagh Law. She is a member in the Employment, Labor, OSHA, and Immigration Department. Nunn-Gilman’s practice focuses on human resource counseling and employment litigation. She has extensive experience handling employment immigration compliance strategies, including I-9s, E-verify, ICE and worksite investigations and enforcement under the Legal Arizona Workers Act (LAWA) and similar state and local laws. She regularly advises clients on matters relating to labor and employment law, federal contractor compliance (including Affirmative Action, Davis-Bacon, and federal contractor E-Verify requirements), ADA, Title VII, FLSA, NLRB, FMLA, leaves, drug and alcohol, union matters, wrongful discharge, wage and hour laws for both public and private employers, employee handbooks, confidentiality and non-compete agreements, and executive agreements. She can be reached at (602) 322-4080 or hnunngilman@cavanaghlaw.com. C O M P A S S

in the November 2018 Issue of ASA’s THE

November 2018

Coming Up

Theme: Improving Productivity • Fixing the Productivity Problem • Key Performance Indicators— The Strategy Spider • Developing a Case for Productivity Improvement in Your Organization • Cost Control Systems That Work & Make You Money • 10 Simple Steps to Improve Productivity • Improving Productivity with a Job-Ready Skilled Workforce • Network-Based Collaboration: Leveling the Playing Field for Subcontractors • Legally Speaking: Change Orders

Look for your issue in November. PAST ISSUES: Access online at www.contractors knowledgedepot.com

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Tradesmen International craftsmen worked more than 14 million man-hours in the last 12 months alone.

...Safety, Productivity and Craftsmanship were emphasized

1 minute at a time.

4 We stand prepared to deliver job-ready apprentice- and journey- level craftsmen precisely when and where ASA subcontractors need them.

4

Our substantial, safety-minded workforce covers all trades at all skill levels!

Each completed a stringent vetting process that includes multiple interviews, skill testing, reference checks, in-depth safety assessment and more. Our trades show up on-time, ready to work and armed with the appropriate tools and Personal Protective Equipment. Call us. Learn about our custom staffing strategies that consistently help ASA members maximize workforce productivity and lower labor-related costs.

Reserve America’s Elite Craftsmen at www.tradesmeninternational.com For Local and Travel Craft opportunites: www.tradesmen.jobs For Veterans, go to: www.tradesmen-veterans.jobs

For one of nearly 200 Tradesmen offices near you, call: 800.573.0850

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JUNE 5TH , 11:0 8 A .M .

A STAGGERING STATISTIC INSPIRES A LIFE-SAVING RULE IN AN INS TANT,

C A LV IN B ERGER SAW THE VA LU E O F IN - C A B B EH AV I O R TR A ININ G FRO M CN A

When a recent safety webinar revealed that 280,000 drivers are involved in serious accidents every year, Calvin Berger of Calberg Contracting took CNA’s recommendation to heart, and posted placards restricting cell phone use in each of his company’s vehicles. Now Calberg Contracting is filing fewer claims, and Calvin’s enjoying a handsome bonus for worker safety and performance.

When you’re looking for risk control programs that keep workers dialed in to relevant industry trends … ® we can show you more.

To learn more about CNA’s coverages and programs for building contractors, contact your independent agent or visit www.cna.com/construction. The examples provided in this material are for illustrative purposes only and any similarity to actual individuals, entities, places or situations is unintentional and purely coincidental. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. “CNA” is a service mark registered by CNA Financial Corporation with the United States Patent and Trademark Office. Certain CNA Financial Corporation subsidiaries use the “CNA” service mark in connection with insurance underwriting and claims activities. Copyright © 2018 CNA. All rights reserved.

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The Contractor's Compass October 2018  

The official educational journal of the American Subcontractors Association

The Contractor's Compass October 2018  

The official educational journal of the American Subcontractors Association

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