Construction Outlook September 2018

SEPT | 2018

A PUBLICATION OF THE UTILITY CONTRACTORS’ ASSOCIATION OF NEW ENGLAND, INC.

• Governor Baker Talks Environmental Bond Bill During this Year’s “OneCape Summit” • Proactive Infrastructure Initiative Fixes Collection Systems

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Years of Excellence 1954-2018

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IN THIS ISSUE

OFFICERS President RICHARD PACELLA, JR. R. M. Pacella, Inc.

President-Elect MARCELLA ALBANESE

Albanese Brothers, Inc.

Treasurer RYAN McCOURT

McCourt Construction Company

Secretary BRIAN COONEY

C. C.Construction Inc.

BOARD OF DIRECTORS GREG ANTONELLI GTA Co., Inc.

VINCENT BARLETTA

Barletta Heavy Division

TONY BORRELLI

Celco Construction Corp.

BEN CAVALLO

C&S Insurance Agency

ANDREW DANIELS J. Derenzo Co.

GREG FEENEY

Feeney Bros. Utility Services

JERRY GAGLIARDUCCI

Gagliarducci Construction, Inc.

NICK GAMACHE

Rain for Rent - New England

MARCO GIOIOSO

P. Gioioso & Sons, Inc.

MIKE GORMAN

E. J. Prescott, Inc.

BILL LEONARD

Aqua Line Utility, Inc.

AL MORTEO

FED. CORP.

JOHN OUR

Robert B. Our Co., Inc.

JOSEPH PACELLA

RJV Construction Corp.

PAUL SCENNA

Albanese D&S, Inc.

CHRIS VALENTI

GVC Construction, Inc.

KEN VOGEL

WES Construction Corp.

DAVID WALSH

Pawtucket Hot Mix Asphalt

ANNE KLAYMAN

Executive Director

3 President’s Message:

Resiliency Continues To Be An Important Topic

5 Legislative Update:

• Progressive Wave Shakes Up Massachusetts Primary Season • DPH Study Finds Opiod Epidemic Hitting Construction Industry Harder Than Most Other Industries in Massachusetts • Attorney General Healey Issues Annual Labor Day Report • MassDEP Issues New Type of Watershed Permit on Cape Cod • News in Brief

15 Labor Issues:

Massachusetts Limits Non-Compete Agreements

19 Governor Baker Talks Environmental Bond Bill During this Year’s “OneCape Summit” 21 Construction Safety & Compliance:

An Interview with Bill Egan, Director of Support Services, Feeney Brothers Utility Services

25 Save the Date: UCANE’s 64th Annual Banquet 27 Legal Corner:

Massachusetts High Court Bars Chapter 93A Claim as Untimely

31 Not Loving that Dirty Water in Scituate 33 UCANE Joins MWRA Advisory Board and Officials for Annual Field Trip 37 Spotlight on Cape Cod:

Cape Wastewater Project Gets Early Boost

40 Proactive Infrastructure Initiative Fixes Collections Systems 49 UCANE Joins 4th Annual “Imagine a Day Without Water” Campaign to Raise Awareness About the Value of Water 50 The 2018 New England Public Works Expo 51 Employee Annual Reviews Aren’t Enough Anymore 55 Safety Corner:

Arming Managers With Guns?

59 Technology in Construction:

What You Need to Know About Massachusetts Data Regulations (Part 1 of 2)

63 UCANE Member Testimonials 65 Financial Management:

• A Grain of SALT in New IRS Notice • Life Insurance as the Ultimate Hedge • Funding Your Buy-Sell with Life Insurance

Editor: Anne Klayman, Associate Editor: Suzanne Savage, Magazine Designer/Assistant Editor: Sherri Klayman Construction Outlook Chairman: Richard Pacella, Jr. Editorial Board: Richard Pacella, Jr., Marcella Albanese, Ryan McCourt, and Brian Cooney CONSTRUCTION OUTLOOK published monthly by the Utility Contractors’ Association of New England, Inc., 300 Congress Street, Suite 101, Quincy, MA 02169; Tel: 617.471.9955; Fax: 617.471.8939; Email: aklayman@ucane.com; Website: www.ucane.com. Statements of fact and opinion are those of the authors alone and not necessarily those of UCANE and the Construction Outlook editorial board and staff. Subscriptions are included in dues payments for UCANE members. Presorted Standard postage paid at Brockton, MA. POSTMASTER, please send form #3579 to Construction Outlook, Crown Colony Office Park, 300 Congress Street, Suite 101, Quincy, MA 02169.

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Resiliency Continues To Be An Important Topic Labor Day has come and gone, the kids have returned to school, and the Patriots have begun their quest for another Super Bowl. These are all signs that another summer is behind us. While I hope everyone is still busy, many have probably already taken the time to reflect on the summer that was. The first thing most people think about is the weather. And for the summer of 2018, the one word to describe the weather was “extreme.” We had extreme heat and some extreme storms. This type of disparity in the weather has become the norm over the last few years, regardless of the season.

That is why you now hear so many public officials talking about “preparedness” and “climate resiliency.” These issues have become increasingly important and will potentially have a huge impact on our industry in the years to come.

I

t is no secret that our water infrastructure is severely outdated. UCANE tracks water main breaks throughout the state, and they come in almost on a daily basis. Most of these breaks are caused by old pipes. Severe storms over the last few years have only served to highlight how woefully inadequate our infrastructure is. This magazine has reported on several occasions that millions of gallons of raw sewage are spilled into the Merrimack River during storms because several treatment plants along the river are too old and are not equipped to handle the storm surges that occur. The most recent event occurred just a few weeks ago in August when over 52 million gallons of raw sewage was spilled into the river over the course of three days due to weather conditions. This should be unacceptable in 2018, but it has now become the norm rather than the exception.

The good news is that our elected officials recognize the issue. The Legislature recently passed and the Governor signed a $2.4 billion Environmental Bond Bill to address the problem. The bill contains funding for municipalities to properly plan for resiliency projects, especially in coastal communities, and also contains millions of dollars for SEPTEMBER, 2018

projects all over the Commonwealth dealing with wastewater and sewer, drinking water, stormwater, treatment plants, as well as the restoration of dams and seawalls. The State Revolving Fund (SRF) program and the Clean Water Trust (CWT) continue to be the main source of funding for water infrastructure. UCANE will always strongly advocate for additional funding for the CWT. We again thank Governor Baker for recommending an additional $30 million for the CWT this year and hope the Legislature will adopt his recommendation. However, we continue to lobby for additional revenue sources such as the Environmental Bond Bill as well as the MassWorks program, which provides millions of grant dollars to municipalities for economic development projects, many of which contain the water infrastructure elements necessary to make economic development a reality.

It is only through this type of approach that the state will be able to address its $21 billion water infrastructure funding gap. What these storms continue to show us is that if we do not invest now, we will most certainly pay for it later, and the results could be devastating. n

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Mark Molloy, Esq., Lynch Associates, Inc.

T

Progressive Wave Shakes Up Massachusetts Primary Season

hroughout Massachusetts, a number of congressional, legislative and county officials faced primary challenges from within their own party. With the September 4 primary now completed, it appears that the Commonwealth will continue to make history in November.

In one of the most widely watched races, Congressman Mike Capuano, a long-time supporter of all things infrastructure, was defeated

by Boston City Councilor Ayanna Pressley.

Councilor Pressley, who was largely discounted by the Democratic establishment, rode a wave of progressive activism in unseating the 10-term Congressman. Congressman Capuano, gracious in defeat, stated her victory reflected voters’ desire for change from the current political climate.

Showing how active the City of Boston proved to be, House Ways and Means Chairman Jeff Sanchez, a long-time supporter of water infrastructure, was defeated by Ms. Nika Elugardo, a progressive Jamaica Plain Democrat. Chairman Sanchez, who sponsored the amendment creating the Water Infrastructure Finance Commission earlier in his tenure, had been supportive of initiatives to improve infrastructure throughout the Commonwealth.

House Assistant Majority Leader Byron Rushing, saw defeat in the form of emergency room physician, Dr. Jon Santiago, who once worked for Representative Rushing. Leader Rushing, who led the fight for expanded civil rights on SEPTEMBER, 2018

behalf of many Massachusetts residents, had seen a resurgence of political power after his own run for Speaker of the House against former Speaker of the House Tom Finneran more than a decade ago.

In the quest for the state’s “Corner Office,” Governor Charlie Baker easily won the Republican primary while former Patrick Administration official, Jay Gonzalez, won the Democratic nod.

The closely watched fight for the state’s top election and public records officer saw Democratic Secretary of State Bill Galvin overcome a spirited challenge from Boston City Councilor Josh Zakim. On the Republican side of the U.S. Senate race, Representative Geoff Diehl won the right to challenge United State Senator Elizabeth Warren. Congressman Stephen Lynch fought off a challenge while Congressman Richard Neal did the same in Western Massachusetts.

Representatives Dan Cullinane, Denise Garlick, Sean Garballey, Angelo Scaccia, and Rady Mom survived intra-party challenges. On the Senate side, Senators Jason Lewis and Jim Welch also overcame “progressive” candidates who attempted to distinguish themselves from the incumbents – despite having nearly identical political positions. Representative Robert Koczera, a long-time legislator from the New Bedford area, lost in his Democratic primary.

The general election will be held Tuesday, November 6. continued on page 7

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Legislative Update continued from page 5

DPH Study Finds Opioid Epidemic Hitting Construction Industry Harder Than Most Other Industries in Massachusetts

A

report released in August by the Massachusetts Department of Public Health (DPH) on state opioid deaths by occupation and industry during the years 2011 through 2015 has revealed that construction and extraction (i.e., mining, quarrying, oil and gas extraction) workers had six times the opioid-related death rate as workers in other industries. Of all opioid-related deaths in the construction and mining category, construction occupations represented 97%.

The report comes as Massachusetts is currently experiencing an epidemic of opioid-related overdoses and deaths. The estimated number of opioid-related overdose deaths in the state more than doubled from 2011 to 2015, and the rate of opioid-related overdose death is higher than the average for the Nation. According to the DPH report, efforts to end this epidemic require an understanding of the populations that are being most affected by it. The report, which categorized opioid-related overdose deaths among Massachusetts residents from 2011 to 2015 by industry and occupation of the deceased, overall, and by demographic characteristics (gender, race/ethnicity, age), also explores factors that may contribute to differences in the rate of opioid-related overdose death among workers in different industries and occupations. Findings from this report will be used to target interventions within industries and occupations that are impacted most by the epidemic and to help identify strategies to address workplace and socioeconomic factors that may be contributing to the epidemic.

In particular, DPH’s study, which used state death certificates to develop a snapshot of the addiction epidemic, found that opioids accounted for approximately 1,096 overdose fatalities in the construction and extraction industry, or 150 deaths per 100,000 workers. The average rate for all workers in Massachusetts was 25 per 100,000 workers.

Other construction-related occupations like material moving (59); installation, maintenance, and repair (54); and building and grounds cleaning and maintenance (38) also had higher-than-average SEPTEMBER, 2018

opioid death rates.

The DPH study also found that the number of fatal opioid overdoses is greater in those occupations that have high rates of workplace injuries and illnesses – potentially leading to the conclusion that some cases of prescribed opioids contributed to fatal overdoses. The rate of opioid-related deaths was also higher among those with limited paid sick leave and lower job security. In addition to evaluating how opioids are prescribed and managed, the report also suggests that employers focus on preventing the injuries for which opioids are prescribed.

To review the Department’s opioid report, please visit: https://d279m997dpfwgl.cloudfront. net/wp/2018/08/opioid-industry-occupation-report.pdf continued on page 9

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Legislative Update continued from page 7

M

Attorney General Healey Issues Annual Labor Day Report

assachusetts Attorney General Maura Healey issued her third annual Labor Day Report on the office’s efforts to combat wage theft and other forms of worker exploitation. According to a press release from the Attorney General’s Office (AGO), the report shows that in FY18, the office assessed more than $9.6 million in restitution and penalties against employers on behalf of working people in Massachusetts.

The Labor Day Report details the activities of the Attorney General’s Fair Labor Division in FY18 (July 1, 2017 to June 30, 2018). The Division, which is responsible for enforcing state laws regulating the payment of wages, including prevailing wage, minimum wage, earned sick leave and overtime, is the lead entity for wage enforcement. In fiscal year 2018, the Fair Labor Division opened 729 cases and required employers to pay $6.8 million in restitution and $2.7 million in penalties. The construction and hospitality industries continued to have the highest percentage of violations cited. The AGO issued citations against 61 employers in the construction industry and assessed nearly $1.5 million in restitution and penalties in FY18.

In terms of employees, more than 4,000 employees received restitution as a direct result of the AGO’s actions.

The Fair Labor Division answered more than 15,000 calls

from members of the public and processed more than 5,700 wage and hour complaints in FY18. Also this fiscal year, investigators from the Fair Labor Division conducted 247 compliance and site visits to jobsites and businesses in nearly 100 cities and towns throughout Massachusetts.

To increase resources available to victims of wage theft, the AGO has continued to partner with legal aid providers, law schools, and private bar attorneys to offer free monthly wage theft clinics in Boston. More than 250 workers have attended clinics in Boston, New Bedford, and Springfield, where they were able to meet with attorneys and advocates free of charge to receive assistance on a range of employment issues. With assistance from clinic partners, workers reported recoveries of more than $166,000 in FY18 in restitution.

The AGO’s Labor Day Report is noteworthy within the context of the ongoing legislative debate over wage theft.

Proponents for creating vicarious liability for wage theft by employers have long asserted that the current laws are insufficient for addressing the issue. Opponents of the measure have continually cited the fact that, as the AGO report demonstrates, the current wage theft laws do work. Expect this issue to return in the 2019-2020 legislative session.

continued on page 11

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Legislative Update continued from page 9

A

MassDEP Issues New Type of Watershed Permit on Cape Cod

ccording to a press release from the agency, the Massachusetts Department of Environmental Protection (MassDEP) recently issued a first-of-its-kind “Watershed Permit” to the four towns sharing the Pleasant Bay watershed, Brewster, Chatham, Harwich, and Orleans. The permit represents an innovative and flexible permitting approach to support Cape Cod communities’ efforts to address the critical water quality challenges stemming from nitrogen contamination of the Cape’s waterways.

With an increase in development and population over the past several decades on Cape Cod, increasing amounts of nitrogen – primarily from septic systems – have been discharged into the Cape’s waterways, polluting local bays and estuaries. To address these challenges, in 2015 Governor Baker certified a plan developed by the Cape Cod Commission aimed at both addressing Cape Cod water quality issues, and restoring those waters to levels where they are able to meet state water quality standards. The plan, known as the “208 Plan,” emphasizes local decision-making to determine the best, most cost-effective solutions rather than those that could otherwise be imposed on communities by the state and federal governments. The plan encourages communities to share treatment systems to reduce costs, and supports innovation and natural solutions where possible. In certifying the plan, Governor Baker directed the MassDEP to develop a watershed-based permitting program to provide communities flexibility in their efforts to address water quality issues in their watersheds.

As reported by the MassDEP, the four towns sharing Pleasant Bay have, through the Pleasant Bay Alliance, been coordinating actions to address the nitrogen contamination for close to two decades. The Alliance and member towns agreed to participate in a Watershed Permit Pilot Project to evaluate the requirements and benefits of this new approach. The new permit, developed with the assistance of the U.S. Environmental Protection Agency (EPA) and the Cape Cod Commission, provides a permitting structure that transcends municipal boundaries and focuses on nitrogen management solutions across an entire watershed.

As developed and implemented, the new watershed permit will: • Provide the permitted communities with an opportunity to employ not just traditional

SEPTEMBER, 2018

wastewater systems, but also alternative approaches, such as fertilizer reduction, inlet restoration, aquaculture or permeable reactive barriers; •

Allow the permitted communities to get credit for the nitrogen reductions stemming from non-traditional approaches and/or non-traditional technologies;

•

Account for the need to implement long-term strategies through a 20-year permit instead of the traditional five-year permits; and

•

Employ an adaptive management approach while carefully monitoring performance and assessing progress.

The MassDEP expects that the Pleasant Bay Watershed Permit Pilot will serve as a model for other communities on Cape Cod as they move forward to develop and implement solutions to their water quality challenges. continued on page 13

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Legislative Update continued from page 11

News in Brief •

•

Statewide Environmental Group Changes Name. According to a press release by the organization, the Massachusetts Conservation Voters (MCV), a new organization has been formed to ensure the long-term viability of these critical places that play a major contribution to tourism, recreation, education and quality of life. MCV, formerly called the Massachusetts League of Environmental Voters, has created a new website (www.massconservationvoters.com), where MCV members and the public will be able to follow how MCV engages in its mission, give feedback on the group’s progress, and locate recreational opportunities across the state.

Cape Bridge Work to Continue in Spring 2019. The New England District of the U.S. Army Corps of Engineers (USACE) and the Massachusetts Department of Transportation (MassDOT) recently announced that scheduled maintenance on the Bourne Bridge over the Cape Cod Canal is being shifted to the spring season next year. In addition, the USACE and MassDOT are announcing the signing of a

memorandum of understanding to continue to facilitate ongoing conversations, a sharing of information and collaborative decision making regarding the inspection of the Bourne and Sagamore Bridges, scheduled maintenance and future project development.

•

Conservation Law Foundation Sues Over Non-Permitted Wastewater Discharges. Asserting that sewage discharges into leaching fields require federal Clean Air Act permits, the Conservation Law Foundation has filed federal lawsuits against a pair of Cape Cod resorts.

The lawsuits, brought against the Wychmere Beach Club and the Wequassett Resort and Golf Club, argue that nitrogen discharges are fueling "noxious algae outbreaks" in Wychmere Harbor and Pleasant Bay. For their part, the resorts assert they are acting in compliance with federal and state law. This will be an interesting case to keep an eye on as the Cape Cod region continues to implement its Section 208 plan aimed at meeting the state’s water quality standards. n

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Richard Wayne, Esq., Prince Lobel Tye LLC

Massachusetts Limits Non-Compete Agreements ​ n August 10, 2018, Governor Baker signed a bill limiting the use of non-compete O agreements in Massachusetts (“Law”) unless they meet certain minimum requirements. The Law will take effect on October 1, 2018. Importantly, it will only apply to agreements entered into after that date. The following is a summary of the key provisions of the Law: •

•

•

•

•

• •

This Law will apply to employees and independent contractors who are, or have been, for at least 30 days immediately prior to termination, a resident of, or employed, in Massachusetts.

Non-compete agreements will not be enforceable against persons in the following categories: (1) overtime non-exempt employees as defined in the Fair Labor Standards Act; (2) undergraduate or graduate students employed as interns; (3) employees discharged without cause; (4) employees who are laid off; (5) or employees age 18 or younger.

Employers cannot avoid the Law by including a choice of Law provision in the agreement requiring a different state’s law to apply, e.g. New Hampshire.

The Law will apply to both traditional non-compete agreements and to ‘forfeiture for competition agreements’, agreements which impose adverse financial consequences if an employee breaches the restriction.

The restriction must be no broader than necessary to protect the employer’s trade secrets, confidential information, or good will.

The agreement must be reasonable in geographic scope.

To be valid, if entered into prior to the time of hire,

SEPTEMBER, 2018

•

•

•

the agreement must provide notice of the employee’s right to review the agreement with counsel prior to execution, and have been presented to the employee by the earlier of a formal offer of employment or at least 10 days prior to the date of hire, and the agreement must be executed by both the employer and employee If demanded during employment, the employee must be offered additional consideration in exchange for an executed agreement and, again, the agreement must be signed by both parties and the employee must have been given 10 days notice and given notice of the right to counsel.

The duration of the restriction cannot exceed 12 months from the date of termination except in circumstances where the employee has either unlawfully taken the employer’s confidential information or otherwise breaches a fiduciary duty. In such cases, the restriction can extend up to two years post-employment.

The Law requires a restricted employee be given ‘income protection’: either (1) a so-called ‘garden leave’ where the employee is paid no less than 50% of his/her pre-separation pay, or (2) an ‘other mutually agreed upon consideration’, the terms of which are set forth in the agreement. The Law does not prescribe any minimum in regards to continued on page 17

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HDSWC_UCANE Ad_6.74x9.375_OL.pdf

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Labor Issues continued from page 15 the terms of this mutually agreed consideration.

The Law will not apply to non-compete restrictions included in a separation agreement, provided the employee is given seven days to rescind acceptance of that agreement.

• The Law exempts non-compete agreements made in contemplation of, or in connection with, the sale of a business.

• This Law does not prohibit or limit agreements prohibiting solicitation of employees, customers or non-disclosure of confidentiality agreements or invention and intellectual agreements.

As stated, this new Law does not govern or invalidate agreements that were signed before the effective date of this Law. However, as the requirements of the new Law are incorporated into future agreements, its terms will likely be adopted by the courts as the public policy of the Commonwealth.

Agreements that do not adhere to these standards, may be more difficult to enforce. Therefore, if the opportunity presents itself, employers could renegotiate their prior agreements to make them compliant with the Law. Lastly, all new non-compete agreements from Massachusetts employees must conform to this Law. n •

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SEPTEMBER, 2018

Governor Baker Talks Environmental Bond Bill During this Year’s “OneCape Summit” CAPE COD- Water quality and coastal resiliency were two big topics that got a lot of attention at this week’s One-Cape Summit in Harwich.

Sponsored by the Cape Cod Commission, the yearly event focuses on big issues facing the region with speeches and presentations.

G

overnor Charlie Baker and Lt. Governor Karyn Polito headlined the afternoon session on Thursday (August 16) – honing in on the water issue.

“There are 78 coastal communities in Massachusetts. Most of them are small towns, and… for [most of] them, the waterfront is their greatest economic asset, [and] in many cases [it also acts as] their biggest economic challenge,” says Gov. Baker.

He also added that it was important for the state to listen to what officials in the local communities needed when it comes to water-related issues.

The governor said they would continue to work on coastal resiliency for the state, especially in light of the increasingly severe storms impacting the region.

He spoke about a $2.4 billion environmental bond bill that will be tapped for projects across the coastal towns.

“It was $1 billion when we filed it, the Legislature perfected it by making it a 2.4 million dollar bond bill. In it is hundreds of millions of dollars in authorizations to do the kind of work that the municipal venerability planning is all about,” Baker added.

The session also included a discussion about how to clean up coastal harbors and embayments.

“Our money is there to support the venerability planning, our money is there to support the hazard mitigation work, and we have a bond bill with a lot of resources attached to it, and capital SEPTEMBER, 2018

EPA New England Regional Administrator Alexandra Dunn addresses the crowd at the OneCape Summit in Harwich.

planning… to actually do a lot of the work… to fix many of these issues,” says Baker.

The governor also addressed legislation he recently rejected that would have imposed a tax on short term rentals that would fund water cleanup on Cape Cod. Baker said he supported the concept, but wanted some tweaks made to the legislation.

This year’s summit also covered the topics of infrastructure planning, community design, and economic development.

Both days featured plenary sessions, focused breakout discussions, and interactive, web-based tools for local and regional planning.

The forum was designed to provide an opportunity for local elected leaders, municipal staff, board members, industry practitioners and community activists to discuss regional issues related to the unique environment and economy.

Written by Matt Pitta & John Bondarek. Reprinted with permission from capecod.com. n

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Construction Safety & Compliance: An Interview with Bill Egan Director of Support Services Feeney Brothers Utility Services UCANE’s Construction Outlook magazine Editors recently caught up with Bill Egan at a busy construction site in Boston. Bill is Director of Support Services with UCANE member firm Feeney Brothers Utility Services. We were able to get a few minutes of Bill’s time to talk about the importance of safety in today’s heavy construction industry.

What is your background in Construction Safety?

My background is in Safety, Utility Training, and Compliance with a primary focus on company Safety Policies, OSHA Standards, and specific gas technology training. My experience is in locating potential health and safety risks on construction sites and working with both management and employees to eliminate them.

Director of Support Services Bill Egan Our team of dedicated Safety professionals and QA/ QC inspectors are committed to educating workers, dedicated to jobsite health and safety management, and to protecting our employees.

What are some of the biggest challenges you face as a Safety Director?

Tell us about the culture of safety that exists at Feeney Brothers.

Early identification of complacency and distraction among crewmembers is my biggest challenge. It’s about human behavior, recognizing these activities, and proactively taking measures to prevent such behavior before it leads to an accident.

We have an established culture at Feeney Brothers called the “The Feeney Way.” “The Feeney Way” is about Safety & Compliance, quality workmanship, and investment in our employees by providing them extensive training, and the equipment they need to work safely. This investment in our employees has created a culture of continuous safety improvement based on collaboration and commitment across our enterprise.

By communicating with our large staff of Safety professionals, including our QA/QC Inspectors working on a multitude of jobsites, it allows us to perform job safety updates and work quality assessments across our worksites daily. Regular communications and meetings with our team enables us to recognize this behavior, address any concerns immediately, and, if warranted, we will implement change across the organization. The goal of this stringent oversight is to inject safety reinforcement into the crew’s daily routine.

In our weekly collaborative meetings between the operations team, safety team, and compliance team we are able to identify trends, determine areas of focus, and adjust accordingly to challenges in order to keep our crews safe.

What advice do you have for other Safety Managers in this industry, specifically pertaining to the current construction climate/current jobsite risks? continued on page 23

SEPTEMBER, 2018

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Safety & Compliance continued from page 21 My advice would be to encourage communication and knowledge sharing across their enterprise. In our organization, it starts from the top with the owners and goes right down to the crewmembers.

In order to have a strong safety culture, you must have front line employee engagement, collaboration, and commitment.

Everyone has to have skin in the game. It begins with a thorough review of the daily job brief, the ability to recognize a change in job conditions, and the empowerment by all members to call a safety stop.

How do you think Contractors as well as their workers can benefit from industry organized and OSHA endorsed events like Safety Week and the National Safety Stand-Downs?

I believe every contractor and employee can benefit from these endorsed events. It increases a worker’s safety awareness and allows us to work with our employees to openly discuss and solve safety issues. These high visibility events also remind employers of the important responsibility that we all share, and that is to keep our employees safe. n

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Massachusetts High Court Bars Chapter 93A Claim as Untimely The Massachusetts Supreme Judicial Court (“SJC”) closed out August with a decision concerning contractor exposure to Chapter 93A claims for unfair and deceptive trade practices. A divided court concluded that a Chapter 93A claim was subject to the 6-year “statute of repose.” Generally speaking, a statute of repose establishes an absolute time limit to bring claims regardless of when they are discovered; if the claim is time-barred under the statute of repose, the claim will fail even if the defendant was otherwise liable. In this case, the high court concluded that a contractor was insulated from Chapter 93A liability once 6 years expired after the contractor completed the project.

​C

hapter 93A is the Massachusetts Consumer Protection Statute. It can be a powerful tool for a plaintiff claiming that a defendant acted unfairly or deceptively in matters of commerce. Because Chapter 93A is intended to deter devious business practices, it incentivizes plaintiffs and punishes defendants; a win on a Chapter 93A claim can lead to an award of multiple damages as well as attorneys’ fees.

Lawyers will often assert Chapter 93A claims ​ on behalf of their clients. In Massachusetts, these claims can have teeth. Although there is a high burden to prove a Chapter 93A violation in a businessto-business dispute, Massachusetts courts have found Chapter 93A violations for conduct that would not necessarily seem out of the ordinary to seasoned construction contractors. For example, in 2016, the Massachusetts Appeals Court upheld Chapter 93A liability against a contractor that had withheld less than $40,000 at the end of a $1.8 Million job to account for a down-the-line supplier claim and inadequate as-builts. The contractor was hit with an award of double damages as well as an award of costs and attorneys’ fees.

With this background in mind, contractors will ​ like the SJC’s decision. The case arose out of a mu-

SEPTEMBER, 2018

nicipal housing rehabilitation project completed more than 15 years ago, in January of 2001. More than a decade after completion, a substantial fire broke out in one of the homes rehabilitated under the project.

Apparently, the fire arose from defects in the electrical wiring work. As it turned out, the contractor did not pull a permit to replace ceiling fixtures and the work did not comply with applicable code requirements and was never inspected. ​Having only learned of these facts after the fire, the homeowner sued the contractor in January of 2016, asserting a Chapter 93A claim for unfair and deceptive business conduct. Since more than six continued on page 29

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Legal Corner continued from page 27 years had elapsed since completion of the project, the contractor moved to dismiss the claim as untimely under the statute of repose. The lower court granted the motion, prompting the homeowner to appeal. ​The SJC took the case on appeal. Finding that the homeowner’s Chapter 93A claim was akin to a negligence claim, the high court applied the 6-year statutory time bar and upheld dismissal of the claim.

The SJC reasoned that otherwise, “no contractor would ever be able to ‘put a project to rest.’” According to the court, the statute of repose “was enacted to shield contractors from the burden of liability throughout their careers and into retirement for work that had long since been completed.”

Notably, three SJC Justices (including the Chief Justice) disagreed with the opinion of the court, potentially opening the door for the SJC to revisit this issue. But at least for now, the decision stands. While different facts may have led to a different result, the bottom line is that a majority of the SJC applied the 6-year statute of repose period to bar a Chapter 93A claim. Thus, the statute of repose can be a viable defense for contractors facing belated Chapter 93A claims. n

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Not Loving that Dirty Water in Scituate

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CITUATE — It has been five years since the town first launched a pipe-replacement program meant to start solving its brown water problem, but residents are still seeing discolored water pouring out of their faucets. Thousands of complaints make their way through town hall each year, and selectmen hosted a meeting dedicated to the issue Monday night, August 13.

Selectmen were set to discuss discolored water at their July 24 meeting, but it was rescheduled because of high interest and expected participation. Representatives from the water department and the town’s consulting engineers will give a presentation on what is being done to fix the problem and will then take questions.

Scituate has roughly 110 miles of water pipes, many of which are cast iron and were installed between 1900 and 1940, Selectman Karen Canfield said. Poor maintenance and age, large amounts of buildup and corrosion often lead to brown or black water getting into homes.

The Scituate Water Department says the brown color comes from naturally occurring iron oxide and is not a health issue.

Five years ago, the town started a project to replace 22 miles of the worst pipes, and all but

SEPTEMBER, 2018

the final phase has been completed. Despite the progress, complaints from residents are still frequent and they are calling for more to be done.

Yard signs have also started popping up around town, reading “No More Brown Water - Fix it First.”

Canfield says the town is planning to complete a full assessment of the water now that about a fifth of the town’s pipes have been replaced. A survey of residents will help identity leaks and prioritize which areas of town need work next. The town’s capital budget projections currently include $1 million annually for pipe replacement, and Canfield said it costs roughly $1 million per mile.

At a meeting earlier this year, DPW Director Kevin Cafferty said the town is also working to flush out water pipes in various sections of town, and that they would continue to do so as long as there was enough water in the reservoir.

In responding to a question on safety concerns regarding discolored water, Cafferty said he would use the “common-sense rule.”

“If you’re getting black water, I wouldn’t drink it,” he said, adding there is water available at the water department for people to pick up if needed.

Written by Mary Whitfill. Reprinted with permission from the Patriot Ledger. n

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SEPTEMBER, 2018

UCANE Joins MWRA Advisory Board and Officials for Annual Field Trip On Thursday, August 23, UCANE joined MWRA officials, public works directors, and several other stakeholders as the Massachusetts Water Resources Authority (MWRA) Advisory Board once again hosted its annual field trip. Stops included Shaft 5 in Weston, the Weston Aqueduct Trail Walk, and the newly renovated Wachusett Aqueduct Pump Station. Over 90 representatives from MWRA communities attended on a picture-perfect summer day.

T

he day began in Weston at the Shaft 5 building. Guests were given a tour and overview of the building, including the condition of the valves and electric actuators and the shutting down of the old valves. MWRA personnel also discussed redundancy and the need for new tunnels.

Attendees then boarded buses for a short ride to the Weston Aqueduct Trail Walk. They were given an overview of the trail programs and the history of the Weston Aqueduct while enjoying a short hike along the 1.1-mile trail. This was followed by a trip to the John

J. Carroll Water Treatment plant where UCANE representatives Mike Lenihan and Jeff Mahoney enjoyed a BBQ lunch with the man for whom the building is named, long-time MWRA Board Member John Carroll. continued on page 35

Mark Johnson, Director of Waterworks for MWRA; Andrew Pappastergion, MWRA Board of Directors; John Carroll, MWRA Board Member; and UCANE ‘s Jeff Mahoney

View of the 7 new pumps installed by UCANE member Barletta Heavy Division at the Wachusett Aqueduct Pump Station. Each pump is powered by a 700HP motor capable of 40MGD. Total Pumping Capacity is 240MGD with 6 pumps on line and 7th on standby.

SEPTEMBER, 2018

James Maruca, Superintendant and Ryan Ferguson, Engineer for Barletta Heavy Division

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

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MWRA Field Trip continued from page 33 The final stop of the day was the new Wachusett Aqueduct Pump Station. This state-of-the-art $50 million facility is almost near completion and is being built by UCANE member Barletta Heavy Division.

Guests were provided an overview of the facility’s design and operation, as well as the solar arrays and other energy efficiencies incorporated into its construction. There was also a tour of the facility and an impressive demonstration of the surge tank. UCANE congratulates Barletta Heavy Division on another job well done!

At the end of the day, Advisory Board Chairman Lou Taverna said, "It is important for our members to see where their dollars are being expended." He further mentioned that "both the MWRA and the Advisory Board staffs do a great job in making our annual trip a success." UCANE would like to echo Lou’s remarks and thank the Advisory Board for another informative and enjoyable day. n

MWRA COO Dave Coppes and Valerie Moran MWRA Manager, Operations Engineering

20180816.indd 1

SEPTEMBER, 2018

UCANE’s Mike Lenihan; MWRA Advisory Board Executive Director Joe Favaloro; Andrew Pappastergion, MWRA Board of Directors; and MWRA Executive Director Fred Laskey

MWRA Executive Director Fred Laskey in front of the surge tank

8/16/2018 11:52:18 AM

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SEPTEMBER, 2018

Cape Wastewater Project Gets Early Boost Money is already flowing to a proposed wastewater treatment partnership between Dennis, Harwich, and Yarmouth that is on the verge of becoming official.

A

bill that would make the DHY Clean Waters Community Partnership a legal entity is still in the works, but $1 million in state funds has already been earmarked for the project through an amendment filed by state Rep. Timothy Whelan, RBrewster, to an environmental bond.

been working with engineering firm CDM Smith on the project for more than a year, and is aiming to finalize plans in time for another round of town meeting approvals next spring. If it’s approved, the project will take a phased approach to construction, which could take up to 40 years to complete.

“When the entity is finally established, they’ll have some startup cash to get the ball moving,” Whelan said.

The combined cost to the towns could approach $1 billion for the first phase, according to CDM Smith Vice President David Young, although officials involved have said it’s likely the project will be eligible for numerous state and federal grants.

The money is intended to help pay for engineering, design and other soft costs needed to finalize plans for a system that would bring wastewater from all three towns to a central treatment plant in South Dennis, Whelan said. State Sen. Julian Cyr, D-Truro, also lobbied on behalf of the earmark, he said.

In May, all three town meetings approved identical articles allowing for legislation that would create the partnership, which stands to save the towns a combined $100 million over installing individual wastewater treatment systems.

A draft of a bill that would make the partnership official was reviewed by all three towns’ boards of selectmen last month, and is currently in the hands of the counsel for the House. Once wording is finalized, the boards will have a chance to give the document final approval before the bill is filed by Whelan and State Reps. Sarah Peake, D-Provincetown, and William Crocker, R-Centerville, Whelan said.

A team of representatives from the towns has

SEPTEMBER, 2018 2016

Even in its early stages, top-level state officials — including Secretary of Energy and Environmental Affairs Matthew Beaton and Massachusetts Department of Environmental Protection Commissioner Martin Suuberg — have voiced support for the project, Whelan said.

“DEP refers to these three towns as their star pupil,” he said. “They’re very well regarded up on Beacon Hill for what their doing — for their cooperation and their work level.”

At a meeting earlier this year, Suuberg praised the partnership as a prime example of a communityled approach to solving the growing problem of pollution of Cape waterways by septic systems — an effort his agency plans to support.

If towns don’t act, the department could designate certain areas of the Cape as nitrogen sensitive, he said. That would allow it to require homeowners continued on page 39

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Cape Cod continued from page 37 to install enhanced treatment systems for their individual septic systems.

Litigation is another possibility if towns don’t comply, Suuberg said.

Timing is a complex issue for the partnership, which will need to coordinate with several Massachusetts Department of Transportation projects planned on roads where sewer pipes will be laid in order to avoid potential delays that could result from the department’s policy that prohibits cuts to the roadway for five years after it’s been repaved.

“We’ve been putting together a plan, or an overlay of the various projects that are planned in the next four to five years, so we can try to coordinate those efforts and make sure we are doing pipework in advance if possible,” said Jeffrey Colby, Yarmouth’s director of public works.

Installing pipes in coordination with state and local projects could also save money on road repavement, Colby said.

A major consideration is the reconstruction of the Bass River Bridge on Route 28 between Dennis and Yarmouth, which is slated to begin in the fall of 2020, Colby said.

“We really need to coordinate with the project in the design stage so that we can easily and inexpensively add a wastewater utility component in the future,” he said. “If that bridge gets built with no considerations for wastewater piping now, adding it in five or six years could be extremely difficult.”

Another consideration is an $8.1 million revamp of a section of Route 28 between Dennis Commons Drive and Upper County Road in Dennis Port. The project, which could begin this fall, will widen the road’s shoulder and add streetscape elements that will better accommodate bicycles; rebuild sidewalks to meet Americans with Disabilities Act requirements; and add new plantings and street lighting, according to Department of Transportation spokeswoman Judith Riley Reardon.

Whelan said the $1 million could help the partnership advance more quickly toward putting pipes in the ground, but stressed that town boards won’t be rushed on finalizing legislative wording.

“This is such an important project,” he said. “It involves so much taxpayer money, that we’re going to take our time — as much time as it takes — to make sure that we get it exactly right.”

Written by Kristen Young. Reprinted from Cape Cod Times. n

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Proactive Infrastructure Initiative Fixes Collections System Cash-strapped community cleans up its collections system with a new approach to upgrades and maintenance.

All utilities face challenges. Some challenges are a lot bigger.

Imagine for a moment being a 29-year-old professional engineer overseeing an ill-equipped and undermanned sewer department in the state’s poorest community, with nearly century-old sewer and water pipes needing tens of millions of dollars of repair and the Environmental Protection Agency and Department of Justice tapping you on the shoulder about Clean Water Act violations.

Welcome to the world of Brian Pena, water and

sewer commissioner for the city of Lawrence, Massachusetts, a Merrimack River Valley town 25 miles north of Boston. Pena started at City Hall on a Tuesday in May 2014 and two days later was welcomed to work by a Department of Justice consent decree. “I didn’t see it coming,” he acknowledges. But neither was he particularly surprised.

As a former engineering consultant to the city for the firm of Woodard & Curran, Pena was very familiar with Lawrence’s sewer and water situation so he continued on page 41

City of Lawrence Sewer & Water Department worker Matt Halloran (left) talks with Commissioner Brian Pena, while worker William Rivera keeps an eye on the backhoe bucket on a jobsite in Lawrence, Massachusetts.

(Photography by Scott Eisen)

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“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

SEPTEMBER, 2018

Proactive Infrastructure continued from page 40 knew what he was getting into when he joined the city’s executive team. “The EPA long knew there was an issue in the city — a lack of investment in infrastructure. The city was very reactive. When the EPA sent out a number of people to observe the work of the department, they got to witness how the city reacted to things. They were not impressed.”

Now they might be. Pena, along with Carlos Jaquez (Director of Public Works) and the city administration of newly elected Mayor Daniel Rivera, have begun to turn things in another direction. Pena credits Rivera with being committed to clean water and strengthened infrastructure that will enhance economic development and the community’s quality of life. All three are proponents of proactive infrastructure supervision.

This change in mindset became immediately clear to Justice Department lawyers when they sat down to negotiate with the city. “When we had the first meeting with the EPA and Justice people, we were excited to show them all we had done,” Pena says. “We had to expand what we were doing quite a bit, but we had planned to do that anyway. We just relayed to city officials that we needed to do it quicker.”

Initial Evaluation Before 2014, the system’s problems were not unknown to community leaders. When water and sewer pipes have been in the ground for 97 years and repairs are constantly being made across the system, the problem and solution are obvious: Old pipes need replacing. Yet for decades the city had banked on the pipes not failing until more city funds were available.

In 2014 the need to repair and replace had become critical. Putting repairs off for another day was no longer a viable fiscal or maintenance approach.

“When I came aboard I pushed for proactive maintenance despite the evident cost of that approach,” Pena says. “Doing nothing until failure occurs is a double-edged sword. But securing $20 million to address the issue was an obstacle. The city would save money in the long run, but the upfront money was still an obstacle.”

At the heart of the city’s new philosophy is a commitment to identify problematic situations before they become critical. In the fall of 2013, a cursory Woodard & Curran evaluation of the city’s sanitary sewer administration concluded that Lawrence kept poor records of a derelict maintenance regime and had no long-term plan for fixing things. The firm was hired continued on page 43

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Proactive Infrastructure continued from page 41

Sewer & Water Department workers Eddie Santiago (left) and Frank Rapisardi move a length of polyvinyl chloride pipe into place to replace a crushed drainage pipe while Frank Condo readies himself in the pit. to scrutinize a cross section of the system and, from that, develop a systematic and systemwide fix.

The consulting firm’s engineers studied flow, inspected manholes, ran inspection cameras through lines, and performed other testing. This evaluation was well under way when the consent decree was served.

Four years later, the city has sent cameras through 300,000 linear feet of pipe, conducted 3,500 certified manhole inspections, and extensively smoke-tested the system. Engineers are on track to inspect the remaining 430,000 linear feet of pipeline over the next five years.

But inspections and evaluations don’t patch leaks. With inspection data in hand, Lawrence officials secured funding from a Massachusetts lowinterest revolving fund and bid out repair work. The money largely is being spent on CIP lining of pipes.

So far, $9 million in repair work has been completed in two contracts. Approximately $10 million more is being done this summer. In some places, spot repairs were necessary before pipes could be lined. In all cases, contractors were able to access the city’s pipe systems through manholes, eliminating excavations and the ensuing traffic congestion.

“CIP repairs have a smaller footprint, which helps keep roads open and traffic flowing. That’s huge for our community of 80,000 people and 50,000 vehicles,” Pena says.

SEPTEMBER, 2018

Finding Savings Green Mountain Pipeline Services is a CIPP Corp. licensee and inserted liners constructed of Applied Felts material containing Interplastic resin. The steam generator used to push the liner into place was fabricated by Green Mountain itself and employs Clayton Industries boilers. Aries Industries cameras are utilized to inspect the work.

Woodard & Curran engineers have tracked the relative costs of this project over the last three years using Innovyze InfoMaster software. The figures are telling. When the city used the conventional emergency repair method — excavating dirt to lay bare a failed pipe, fixing it, and covering it up again — it spent an average of $760 per linear foot of repaired pipe. When employing CIPP technology, the repair cost per linear foot of pipe was $174.

The cost of contracting with Woodard & Curran to manage the repair process and to inspect and smoke-test cost $3 per linear foot, and the consultant’s management of the work has cost the city 97 cents per foot. In other words, to date, Lawrence has saved itself almost $600 for each foot of inspected and repaired pipe.

Rather than randomly patching pipes as leaks continued on page 45

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Proactive Infrastructure continued from page 43 erupt, the money is being spent to rehabilitate entire sections of still-functioning pipe. This more substantial upgrade puts the city in a better position to manage its future economic development. “That has always been one of the selling points,” Pena says.

Making Progress The city is located near two major highways and, with three rivers intersecting the city limits, has more than enough water for residential and commercial use. But the infrastructure was problematic. “We always have made the point that Lawrence has the infrastructure to support expansion, and now we are in an even better position to do that.”

Not that the municipality’s upgrade is anywhere near complete. The CIPP work is proving its value, but there still is a lot of work to be done. Fifty-one of 138 miles of sewer lines — two-thirds of which are sanitary/stormwater combinations — have been inspected. Cameras are being run through another 22 miles this year. That still leaves 65 miles of pipe waiting to be inspected. (Not to mention 154 miles of century-old water pipe, which the city also is carefully monitoring.)

Given all that, the sewer and water department cannot afford to proceed without a plan in place. So, it

SEPTEMBER, 2018

has prioritized repairs according to levels of urgency: • Failed • Likely to Fail • Reported Overflows • Paving/Infrastructure Street Work Already Scheduled.

In addition, engineers consider stormwater quality issues, the presence of critical facilities such as hospitals, and so on. This matrix of criteria is fed into a computer program to generate a priority list for the engineers.

Even if all goes as planned and the relative integrity of the entire system is mapped and repaired according to these criteria, the work isn’t done. A second round of inspections will be launched — this time with lower tolerances for what is acceptable. This will establish a pattern of regular inspection over twoor three-year intervals. In other words, the city has learned its lesson.

“I feel we have definitely learned that doing nothing is not, at the end of the day, a good approach,” Pena says. “We have learned not to be reactive. You have to do something, something intelligent, and make the best use of available funds.” Despite the evident improvement in the city’s infrastructure, he continued on page 47

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SEPTEMBER, 2018

Proactive Infrastructure continued from page 45 says he is not yet comfortable sitting back and reflecting on what the department has accomplished.

“There is always so much yet to do. Still, I encourage my sewer foreman and his staff to be positive.

There are fewer emergency incidents, fewer collapsed pipes, fewer backups. We are making progress.”

Undermanned, Underequipped When Brian Pena became water and sewer commissioner in Lawrence, Massachusetts, in 2014, he inherited a small sewer operations staff. The combined sewer and water division has 45 employees, but only four of those were assigned to sewer work when Pena took over — a foreman and three equipment operators. Four employees maintained a sewer system serving about 80,000 residents.

“Within the first couple of years, I was able to double staff to eight and secure budgeting for 12 people,” Pena recalls. “Now we’re down to six. We need more staff. I have lines out to hire more, but I can’t find people to take the bait.”

What that means operationally is that the department has to contract out some of its basic maintenance and operating responsibilities. Crews have been busy with day-to-day tasks that make it difficult to

focus on longer-range projects that head off problems.

For instance, if a catch basin needs cleaning out, Pena sometimes must outsource the work because his handful of employees are working on a backed-up line.

This understaffing goes hand in hand with the sewer department being underequipped. When Pena arrived, the department had an 11-year-old hydrovac unit, a couple of trucks and a trailered pressure pump — none of the units particularly well-maintained. “And there was no redundancy in any of it.” If the hydrovac unit wouldn’t start, there was no backup plan.

“But the most unacceptable situation was the sharing of equipment across the sewer and water division,” he says. “Sharing equipment is fine and cost-effective, but too often work was put off in one department because the other department was using the equipment. If the water department was using the backhoe, for example, the sewer department had to reschedule its work.”

The sewer department has since acquired a new backhoe, a new dump truck, and a new Vac-Con jet/ vac unit. The problem now is that both of the department’s jet/vac truck operators left. “We are recruiting new operators,” the commissioner says. “But even with two vac operators and hydrovac trucks, we don’t have the manpower to get to all the catch basins.”

Written by Giles Lambertson. Reprinted with permission. n

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SEPTEMBER, 2018

UCANE Joins 4th Annual “Imagine a Day Without Water” Campaign to Raise Awareness About the Value of Water Most Americans take water for granted. They turn on the tap, and clean water flows out. They flush the toilet, and dirty water goes away. Most Americans hardly think twice about the infrastructure that brings water to their homes, and safely returns water to our environment – but they should. The reality is, our water infrastructure is aging and failing. While most Americans cannot imagine a day without water, there are many communities that have lived, and are living, without water because they don’t have access to safe and reliable water systems. As citizens go to the polls this fall to vote in the midterm elections, the next wave of lawmakers from state legislatures to the nation’s capital need to make water a priority so no American has to live or imagine a day without water again.

A Day Without Water = Crisis A day without water is a public health and safety crisis. It means no water to shower or flush the toilet, and no water to drink or cook with, no water to do laundry or dishes. A single nationwide day without water service would put $43.5 billion in economic activity at risk and would make it impossible for doctors, firefighters, and farmers to serve our communities. Our water infrastructure supports every facet of our daily lives, but our water infrastructure is facing incredible challenges. Demographic and climate pressures, such as increased natural disasters, drought, flooding, and wildfire, threaten our infrastructure and increase the possibility of a day without water. These challenges look different to different communities and will require local solutions, but it’s clear that reinvestment in our water systems must be a national priority.

Reinvestment in Water Infrastructure = Opportunity The good news is that closing our nation’s water infrastructure gap would generate over $220 billion in total annual economic activity, create and sustain over a million jobs, and guarantee our public health and environmental safety. Americans widely support increased investment in our nation’s water infrastructure. National polling shows 88% of Americans support increasing federal investment to rebuild water infrastructure, and 75% of Americans want Congress to invest in our nation’s water infrastructure before our systems fail. No other issue facing our public officials has such a broad consensus, and 2018's elections represent an opportunity to make sure water is

SEPTEMBER, 2018

paramount in the minds of candidates and to vote for leaders who share our values.

Strong Leadership on Water = Secure Future This fall, Americans will vote for all 435 seats in the House of Representatives, 35 Senate seats, 36 gubernatorial races, and countless state legislature and local races. Candidates should put water infrastructure on their agendas and share their plans for closing the water infrastructure gap and protecting our health, safety, environment, and economy. Public officials at the local, state, and national levels must prioritize investment in water and build stronger water and wastewater systems.

Investing in our water is investing in a future where no American will have to imagine a day without water.

On October 10, UCANE will once again join elected officials, water utilities, community leaders, educators, and businesses participating in the 4th Annual “Imagine a Day Without Water” campaign, a nationwide day of education and advocacy about the value of water. Led by the Value of Water Campaign, hundreds of organizations across the country will host events and spearhead projects aimed at raising awareness about the crucial need for investment in our nation’s water infrastructure. n

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SEPTEMBER, 2018

Employee Annual Reviews Aren’t Enough Anymore Want a more productive and successful team? Get going with more frequent conversations about each employee’s performance and plans for the future with your company.

N

ot so long ago, most people in the workplace received feedback once a year during a performance review. An employee didn’t expect a development plan, a career track, or anyone to take an interest in his or her professional growth. That responsibility was often a solo activity. In fact, as recently as a couple of decades ago, there wasn’t a great deal of help on the road to career success, and most people didn’t complain. It simply was what it was.

But times change, and norms evolve. The practice of once-a-year feedback is fast becoming an anachronism and out of place in the modern business setting. The reason the average worker has evolved to expect a steady diet of attention and conversation is debatable and perhaps worth scholarly inquiry. In the meantime, however, a demand for dialogue exists and must be answered.

So, why should company owners and managers take action? What does it take to establish and maintain an ongoing give-and-take? How can you balance the constant conversation with their own workplace responsibilities?

For some, accepting the new reality means moving past the fact that they came along when life was hard. Sorry, it’s time to get with the times, and get over it. Practices have evolved. First-class organizations have career paths, they invest in employee development, and managers engage in regular dialogue with their employees. Bottom line: If you want a top-notch worker, you better start acting like you know what to do with one.

Get the Conversation Started Once you’ve bought into the notion that routine conversation is a must, the next step is knowing how to guide interactions. First, take an interest. Very little builds engagement as well as a manager who seems to genuinely care for people, promotes their success, and has the ability to develop them. This is not an annual affair. Rather, you’ve got to have a range of formal and informal conversations throughout the year. To get started, ask questions, and pay attention to the answers.

SEPTEMBER, 2018

• •

“What are you working on that’s exciting to you?”

“What aspects of your job do you enjoy the most?”

• “If you could eliminate parts of your work, what would you stop doing?”

• “If you could try something new with limited chance for failure, what risks would you take?”

• “Tell me a little about what first attracted you to this job. Has anything changed about how you feel about your work here?”

• “How do you feel about our interactions? Do I give your development the right amount of attention, and do you receive the right amount of feedback?”

There is no limit to the questions you could ask.

The key is showing a sincere interest in the answers, withholding judgment about what you’re told, and taking action when you can.

Secondly, be observant. As a manager, your job is to focus on the work that gets done and how it gets done. When you pay attention and are specific with your feedback, you show you’ve spent time to notice what’s working and where opportunities exist. In other words, it’s important to communicate to people that they matter to you. continued on page 53

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SEPTEMBER, 2018

Employee Reviews continued from page 51 As a manager, your job is to focus on the work that gets done and how it gets done. When you pay attention and are specific with your feedback, you show you’ve spent time to notice what’s working and where opportunities exist.

Finding the Time There is no clock fairy or magic solution to time management and fitting feedback and development conversations into a regular workload. It’s an effort that requires discipline. To ensure planned dialogue happens, you need to put formal meetings on a calendar, schedule them at regular intervals, show up on time, and put the smartphone away.

While increased levels of informal feedback and scheduled conversation can seem overwhelming at first, the more often a manager engages, the easier it is, the franker the discussions become, and the greater the understanding between the employee and the manager grows.

With whom should you be having conversations?

Written by Kate Zabriskie. Reprinted with permission. n

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ARMING MANAGERS WITH GUNS? As the incidents of workplace shootings tragically continue to mount, society is searching for solutions to stem the tide. The answer is complex involving societal values, constitutional rights, legal liabilities, insurance coverage and a host of other issues. One proposed solution is to allow managers to be armed with firearms to respond in the event of a potential or actual active shooter incident. This article is intended to identify the potential practical advantages, disadvantages and legal liabilities and offer some recommendations although the legal landscape is constantly evolving with new proposed legislation.

Advantages of Allowing Managers to Bring Guns to Work There could be a limited advantage to allow managers to bring guns (assume this is a handgun). The manager would have to have a Firearm Owner Identification (FOID) card to carry a firearm and also a Concealed Carry Permit (CCP) to carry a concealed firearm, if the firearm will be concealed. If the manager has these various documents there should be some confidence that they are aware of and trained in the use of a firearm. In addition, the managers should be required to attend credentialed Active Shooter or other equivalent training and obtain certification of successful completion. In the event of an incident, the manager would have a firearm available that could be utilized to cause a potential shooter to surrender their weapon and disarm them or to shoot the potential shooter to disable them from further activity.

Disadvantages of Allowing Managers to Bring Guns to Work The potential disadvantages are many. Initially, the manager is not a sworn law enforcement officer, so the legal immunities that such officers have for liability to themselves and the employer will not at-

SEPTEMBER, 2018

tach. While the manager certainly has his/her right under the Second Amendment to carry the firearm, assuming necessary permits, such permits do not authorize the manager to bring the firearm into the workplace premises itself or the use of force. Rather, the manager would be relying upon his/her inherent right to self-defense, which only permits reasonable use of force to protect the manager or others. In the event of an incident where the manager utilizes the firearm to subdue or cause injury to an active shooter or innocent bystander, the issue will then become whether the manager exceeded the scope of reasonable force and acted negligently or recklessly. In both cases there could be liability for civil damages continued on page 57

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Safety Corner continued from page 55 for personal injury, wrongful death, intentional infliction of emotional distress and, in the case of reckless conduct, punitive damages to any individual who suffers physical or emotional harm. If the manager acted in a reckless manner, there could also be criminal liability. Because the manager would be acting as an agent of the employer, there would be potential agency liability for the employer. The employer may not be able to purchase liability insurance to cover this risk and would potentially be uninsured for any damages.

dividual (manager) to bring the firearm within the workplace as described above. It would also have to require the manager to have all current permits or licenses. The policy would also have to define the circumstances under which the manager would be permitted to use the firearm, which then raises the issue of defining reasonable use of force in situations which are not predictable and require the manager’s judgment on a split second basis. This type of instantaneous decision making is the challenge faced by seasoned law enforcement officers on a daily basis and cannot reasonably anticipate the appropriate response for every situation.

How Would a Policy Allowing Guns Be Crafted and Communicated?

Impact of Policy on Workplace Environment

The employer’s policy would have to be carefully Area Boston crafted to comply with Locations applicable Federal, State and local laws and ordinances regarding permitting an in-

Such a policy could have varying impacts on employee morale. The manager who is authorized to use the firearm may feel very secure, especially as regards his/her own self-defense.

2 Dexter Street Everett, MA 02149 Other employees may likewise Boston Area Boston Area feel some sense of security beLocations Locations 431 Second Street cause of this policy, although other employees may feel insecure beEverett, MA 02149 2 Dexter Street 2 Dexter Street cause they have concerns about

Everett, MA 02149 Everett, MA 02149 the capabilities of the manager to properly react in an emergency 431 Second Street 431 Second Street and whether, if the manager overEverett, MA 02149 Everett, MA 02149 reacts and discharges the firearm BOSTON AREA LOCATIONS

improperly, that they may become

2 Dexter Street 431 Second Street an innocent bystander shooting Everett, MA 02149 Everett, MA 02149 victim.

Additional Screening For the Manager

Since there is no statutory right to carry a firearm into the employer’s physical premises, although employees who have a valid CCP can bring it onto the parking lot, but it must remain in a locked container (vehicle trunk or glove box, Minichiello Bros./Scrap-It, Inc., Minichiello Bros./Scrap-It, Inc. weapon container) out of sight, the Serves over 2500 customers a week and is one of New England’s largest Serves over 2500 customers a week and is one New England's largest buyers, employer should seriously conbuyers, sellers, and processors of scrap metal.

Forour overgoal 60 years goal sellers and processors of scrap metal. For over 60 years has our remained sider additional screening. For exhas remained the same to provide the best prices in the industry along with the same - to provide the best prices in the industry along with top notch ample, confirming the manager’s top notch customer service!

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Minichiello Bros./Scrap-It, Inc., the military or law enforcement. If Serves over 2500 customers a week and is one New England's largest buyers, the employer so desires, it could sellers and processors of scrap metal.

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Fortop over 60 years our goal has remained plying with the Fair Credit Reportcustomer service! the Callsame Fred -Rogers at 617-595-5505 to provide the best prices in the industry along with top notch ing Act (FCRA) to determine if the customer service! Call Fred Rogers at 617-595-5505 employee has any prior history of

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Safety Corner continued from page 57

Recommendations

with Disabilities Act (ADA) issues, it might consider an evaluation by a mental health professional regarding the employee’s ability to react with a firearm in an emergency situation. Such psychological evaluations are routinely conducted for potential law enforcement officers across the country. NO CRIMINAL MIRANDA WARNINGS.

Potential New Laws Because of the current impetus to enact new Federal and State laws, it is clear that employers will have to keep informed on such changes in order to stay in compliance. In addition to the general statutes that permit an individual with a valid CCP permit to bring a firearm on to the parking lot, there have already been several proposals to increase liability for the employer if a qualified and permitted employee is not allowed to carry his/her firearm into the workplace and use it for purposes of his/her self-defense and the employee sustains injury.

Crushed Stone & State Specified Dense Graded Base

If the employer decides to permit managers to be armed within the workplace, it should carefully consider the following factors: •

confirm all Federal, State and local laws and ordinances that apply to licensing and qualifying a manager to carry a firearm into the workplace itself and utilize it in the workplace

•

ensure that any manager who is permitted to carry a firearm in the workplace has successfully completed all required training and that documentation is obtained and kept current

•

conduct an exhaustive background check of the manager to confirm that there is no prior civil or criminal history of violent behavior or mental or emotional health conditions that would impact the manager’s ability to responsibly carry the firearm and utilize it properly within the limits of reasonable use of force in an incident

•

develop a written policy which incorporates the foregoing elements as well as any generally recognized industry practices for such activity including Active Shooter protocols

•

confirm whether the employer’s general liability and workers’ compensation insurance will be applicable to the potential risks associated with the employer’s policy

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Written by Mark A. Lies, II is a Labor and Employment Law attorney and Partner with Seyfarth Shaw LLP. He specializes in Occupational Safety and Health law and related employment law and personal injury litigation. n

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Brian MacFee, Systems Support Corporation

What You Need to Know About Massachusetts Data Regulations Part 1 of a 2 Part Article Recently our company sent a questionnaire to our clients and friends asking what topics they are interested in relating to IT. The number one topic (by far) was, “What Cyber Security laws apply to me and what do I need to do about them?”

We are going to publish a couple of small but informative articles relating to this. They will be brief, no commercials, and no techno speak.

The perspective of these articles is for the Business Person, Owner or Professional (You!) who may need to maintain and secure information about their employees, clients, vendors, or others. We will focus on Massachusetts businesses because other states have very different security statutes.

We are not attorneys, nor do we portray one on the internet. Our articles are intended to inform, and NOT to provide legal advice. We encourage you to contact an attorney for any legal advice.

Like everything else in our adult lives, ignorance is not an excuse, and the consequences can be quite severe. We will try to help you make sure that you are aware of what applies to you and how to prepare for it.

SEPTEMBER, 2018

T

Why All the Fuss?

he primary goal of Massachusetts cyber security laws is to protect the personal information of individuals and corporations. Personal Information (PI) is usually defined as related to Health (Medical Records) and Finance (Social Security Numbers, Bank Accounts, Loans, and Credit Cards, and in some cases online account information, i.e., Facebook Accounts, Twitter, etc.)

Cybercrime is by far the #1 crime in the world these days, and even several countries are being accused of Cybercrimes being practiced by their governments, no less. The tools and techniques they use now are so good that everyone is “on the radar”, including YOU, regardless of size or revenue. For the average individual, Identity Theft is becoming the crime that will most likely affect them in their lifetime.

How Do We Respond?

With everything going online these days, many government entities, from several Federal Agencies continued on page 60

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59

Technology in Const. continued from page 59 to our State of Massachusetts, have set forth standards and statutes for businesses and professionals to follow to ensure that Personal Information is protected from unauthorized use. Most of these standards are reasonable and can be complied with by the typical business with minimal expense. Almost all of these standards require the Business or Professional to maintain documentation on their practices related to using and securing Personal Information.

What Applies to Me? This is the question we get most often. With all the alphabet soup out there for regulations and statutes, it can be very confusing and difficult to figure out which ones you need to pay attention to, and ignorance is not an excuse. We’ll start with the ones that most businesses in Massachusetts need to worry about and get more specific after that. This focuses on Massachusetts and no other state, and there may be additional security regulations that you need to follow, especially in Medical, Legal, and Financial practices. We advise that you consult with security professionals to ensure that your practices comply with additional requirements not covered in our discussion.

First, the broadest requirements: 201 CMR 17: Standards for the protection of personal in-

formation of residents of the Commonwealth.

This was the one that woke up businesses in Massachusetts. It finally went into effect on March 1, 2010 after a few hiccups. If you are a business in Massachusetts, and you have or maintain personal information about your employees or clients, i.e. Social Security, Bank Accounts, Medical Information, Credit Information, etc., you are required to comply with these regulations, and annually review your practices and these regulations for compliance.

At the heart of this statute is the requirement of developing a plan to securely manage the personal information, documenting the plan in detail, and requiring employees who manage the information to read the plan and sign that they will follow the procedures documented in the plan. In addition, the plan should be updated on an annual basis, reviewed, and signed again. It is referred to as a WISP - Working Information Security Plan.

We won’t go into the specifics of the plan here as it would be quite lengthy. We encourage you to consult with your IT professional or ask them for a referral to a security specialist.

Like the IRS has “flags” for audits, one flag for 201 CMR 17 compliance is an organization not having a WISP to provide on demand. Have one available when requested, it is a good indication that you are continued on page 61

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Technology in Const. continued from page 60 conscious of 201 CMR 17, and are complying with its requirements, even if you do not have or manage personal information.

PCI Compliance The Payment Card Industry Data Security Standard (PCI DSS), commonly called PCI, is not a government regulation, but a standard established by the credit card industry. If your organization accepts credit cards for payment, you have agreed to be bound by these standards, and need to ensure that your practices meet these requirements, as you have also agreed to be penalized if you are found to be non compliant.

There is a Self Assessment Questionnaire available online from the PCI Security Standards Council at: https://www.pcisecuritystandards.org/documents/SAQ_A_v3.pdf.

Many of the requirements overlap and coincide with 201 CMR 17. We suggest that you contact your Merchant Services provider regarding your compliance as well as your IT professional. Chances are you already have had some experience with this as Merchant Service providers (Credit Card companies) are actively engaging with their clients to see that they are complying – some even have compliance built into the solution.

Like everything else an ounce of prevention is worth a pound of cure, so spending a little time to ensure you are PCI Compliant may help you avoid some pretty hefty fees, and make no mistakes, those fees are being charged to egregious noncompliance cases.

Services comes HIPAA - Health Insurance Portability and Accountability Act of 1996. A good summary of the HIPAA privacy rule can be found at: https:// www.hhs.gov/hipaa/for-professionals/privacy/lawsregulations/index.html HIPAA applies to any organization that manages or otherwise uses individual’s health information. This of course includes doctors and other health practitioners and their administrators, insurance companies, dentists, pharmacists, ophthalmologists, and others.

Also included would be anyone who may touch or be exposed to this information indirectly – i.e., filling a nonpharmaceutical prescription for medical equipment or hardware, legal services regarding a health issue, or an employer who has access to this information whether they actually access it.

While these regulations address a narrower scope of professionals, look at your practices carefully. If you have access to any of this information, whether you access it or not, you need to make sure that your procedures that may give you access are compliant with HIPAA. Like the others, we will not go into the specific requirements of HIPAA compliance here, but it is more complex than the others we have described. For example, in a doctor’s office, the computer monitors need special screen overlays that cannot be seen from the side! You really need to work with some HIPAA professionals to review your practices and document compliant procedures.

Government, Military, and Defense Contractors

HIPAA

If you fall under this category, you likely already know the vast array of regulations and statutes reFrom the US Department of Health and Human quiring your compliance – and it is not viewed as personal information. As such it is beyond the scope of our discussion here.

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Not only is ignorance not bliss, but it can be incredibly expensive! n

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IN THIS ISSUE • A Grain of SALT in New IRS Notice • Life Insurance as the Ultimate Hedge • Funding Your Buy-Sell with Life Insurance

Smart tax, business and planning ideas from y

A grain of SALT in new IRS notice

T

A Grain of SALT in New IRS Notice

axpayers who itemize deductions on Schedule A of their tax return have been able to deduct outlays for state and local income tax as well as property tax with no upper limit. (State and local sales tax may be deducted instead of income tax.) However, as of 2018, the Tax Cuts and Jobs Act of 2017 provides that no more than $10,000 of these state and local tax (SALT) expenses can be deducted on single or joint tax returns ($5,000 for married individuals filing separately).

Example: Marge Williams might have been able to deduct $20,000, $50,000, or even more in SALT payments in 2017. For 2018, Marge’s SALT deduction will be capped at $10,000. Thus, her SALT payments over $10,000 will be made with 100-cent dollars. Previously, those state and local tax bills might have effectively been paid with, say, 65-cent or even 60.4cent dollars, depending on her federal tax bracket.

Political figures in high tax states worry that this sizable increase in net tax obligations will cause residents to flee to other states with lower taxes; moreover, residents of other states might be reluctant to move to places where taxes are steep. That may or may not be the case. After all, taxpayers subject to the alternative minimum tax have been making SALT payments with 100-cent dollars for years—SALT is an add-back item in the alternative minimum tax calculation, wiping out the tax benefit—so the new rule might not be as painful as it appears.

SEPTEMBER, 2018

First Responder Taxpayers who itemize deductions on Schedule A of their tax return been Nevertheless, high tax states have are considering countermoves. first state to actand on this SALT able to deductThe outlays for state local pinch was New York, which enacted two-fold legislaincome tax as well as property tax with tion in April. One aspect of this legislation is allowno upper limit.to(State and local sales tax ing New Yorkers make contributions to designated may deducted of income tax.) healthbe and educationinstead state charitable funds, which, theoretically,as would qualifythe for federal andand stateJobs chariHowever, of 2018, Tax Cuts table income tax deductions.

Local governments Act of 2017 provides that no more than are also authorized to create charitable funds. $10,000 of these state and local tax (SALT) Taxpayers making contributions to state charitaexpenses canalso be get deducted on single or joint ble funds would state income tax credits, and tax returns ($5,000 for married individuals taxpayers making contributions to a local charitable fund would get a property tax credit. The result could filing separately). be reducing residents’ non-deductible SALT expenses while increasing deductible charitable donations.

Example: Marge Williams might have been The second part of the New York plan involves able to deduct $20,000, or even a voluntary payroll tax, paid$50,000, by employers, starting more SALT payments For 2018, at 1.5%inand escalating to 5%in in 2017. two years.

This voluntary payroll taxdeduction also will generate income tax Marge’s SALT will bestate capped credits. at $10,000. Thus, her SALT payments continued on page 67

over $10,000 will be made with 100-cent dollars. Previously, those state and local “BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” tax bills might have effectively been paid 65 with, say, 65-cent or even 60.4-cent dollars,

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Financial Management continued from page 65

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Apparently, the idea is that employers would offset the extra expense by cutting wages, which will wind up as a wash for employees because of the tax savings.

IRS Takes Notice Observers wondered what the IRS would think about such “work arounds” of the new SALT limits.

Their questions were answered swiftly in IRS Notice 2018-54, released in May. The IRS characterized such state efforts as attempts to “circumvent” the new law. Federal tax deductions are controlled by federal law, the notice pointed out: Just because a state says that certain outlays are deductible on federal tax returns does not necessarily make it the last word on the subject.

In the notice, the IRS announced that it will publish proposed regulations on this issue. The agency mentioned “substance over form,” indicating that challenges are likely. Officials in New York and other high tax states reportedly will continue to seek SALT relief. Tax preparers and taxpayers may want to carefully consider whether they want to be among the proverbial dogs in this fight. continued on page 68

Deducting Tax Payments The IRS lists the following types of deductible nonbusiness taxes: • State, local, and foreign income taxes • State and local general sales taxes • State, local, and foreign real estate taxes • State and local personal property taxes Taxpayers can elect to deduct state and local sales tax instead of state and local income tax, but not both.

Those who elect to deduct state and local sales tax may use either actual expenses or optional IRS sales tax tables.

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Financial Management continued from page 67

Life Insurance as the Ultimate Hedge

M

any people think of life insurance as a product for family protection. The life of one or two breadwinners is insured; in case of an untimely death, the insurance payout can help with raising children and maintaining the current lifestyle.

Once the children are able to live independently and a surviving spouse is financially secure, insurance coverage may be dropped. Such a strategy uses life insurance as a hedge against the risk of lost income when that cash flow is vital.

This type of planning is often necessary. That said, life insurance may serve other purposes, including some that are not readily apparent.

Final Expenses When someone dies, funeral and burial expenses can be daunting. In addition, the decedent’s debts

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might need to be paid off, perhaps including substantial end-of-life medical bills. Many insurers offer policies specifically for these and other post-death obligations, with death benefits commonly ranging from $10,000 to $50,000.

The beneficiary, typically a surviving spouse or child, can receive a cash inflow in a relatively short time. Generally, this payout won’t be subject to income tax. The result might be less stress for beneficiaries during a difficult time and a reduced need to make immediate financial decisions in order to raise funds.

Investment Support This year’s stock market volatility has worried some investors, who may be tempted to turn to safer holdings, which have little or no long-term growth potential. Prudent use of life insurance might help to allay such fears.

Example 1: Jill Miller has $600,000 in her investment portfolio, where she has a sizable allocation to stocks. She is concerned that an economic downturn continued on page 69

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SEPTEMBER, 2018

Financial Management continued from page 68 could drop her portfolio value to $500,000, $400,000, or less. Therefore, Jill buys a $250,000 policy on her life.

Now Jill knows that her children, the policy beneficiaries, will receive that $250,000 at her death, income-tax-free, in addition to any other assets she’ll pass down. This gives her the confidence to continue holding stocks, which might deliver substantial gains for Jill and her children.

Balancing Acts Life insurance also can help to treat heirs equally, if that is someone’s intention, but circumstances create challenges.

Example 2: Charles Phillips, a widower, owns a successful business in which his older daughter Diane has become a key executive. Charles would like to leave the company to Diane, but that would exclude his younger daughter Eve, who has other interests.

Therefore, Charles buys a large insurance policy on his life, payable to Eve. This assured death benefit for Eve will help Charles structure his estate plan so that both of his daughters will be treated fairly. There is a potential downside to consider if

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Charles is wealthy enough to have an estate that is subject to the federal estate tax ($11.18 million in 2018). In this case, a large insurance policy will swell his gross estate, leading to a greater estate tax liability.

Life insurance may be especially helpful when one or both spouses has children from a previous marriage.

Example 3: Jim Devlin’s estate plan calls for most of his assets to be left in trust for his second wife, Robin. At Robin’s death, the trust assets will pass to Jim’s children from his first marriage.

Robin is younger than Jim, so it could be many years before his children receive a meaningful inheritance.

Again, life insurance can provide an answer. If Jim insures his life and names his children as beneficiaries, his children may get an ample amount without having a long wait.

Proceed Carefully Your Accountant can help explain the tax aspects of a policy you’re considering, but you should exercise caution when evaluating any possible purchase of life insurance. Find out what you’ll be paying and what you’ll be receiving in return. continued on page 70

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Financial Management continued from page 69

Funding Your Buy-Sell with Life Insurance

A

mong the trigger events of a small company buy-sell agreement, death of a co-owner typically is included.

Example 1: Wendy Young and Victor Thomas both own 50% of YT Corp. They have a buy-sell, which calls for Wendy to buy Victor’s interest in YT if he dies. Similarly, Victor will buy Wendy’s interest in YT from her estate if she is the first to die.

Small company buy-sells such as the one for YT Corp. often fall into one of two categories: • Cross purchase. Wendy will buy Victor’s shares directly from his heirs, or vice versa.

• Redemption. Here, YT Corp. will buy the decedent’s interest. If Victor is first

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to die, YT will buy his shares, leaving Wendy as the sole owner.

Finding the Funds With either type of buy-sell, a “buy” must be made, and the decedent’s interest in the company might be extremely valuable. Therefore, life insurance often is used to provide the funds for the buyout.

Example 2: In a cross-purchase arrangement, Wendy will acquire a policy on Victor’s life, and Victor will own a policy on Wendy’s life. If Victor dies, the insurance payout will go to Wendy, generally free of income tax. Wendy can use this money to buy Victor’s interest in YT Corp. from his estate at the price set in the buy-sell.

If Victor is the survivor, the process will take place in reverse.

Pros and Cons There are some advantages to a cross-purchase arrangement. If the shares have appreciated over the years, Wendy will get a basis step-up to current value when she buys Victor’s shares. That could reduce the tax on a future sale of all of Wendy’s shares.

On the other hand, the premiums on a large life insurance policy could be substantial. Wendy and Victor might not be willing and able to pay these costs personally. This issue could be further complicated if, say, Victor is much older than Wendy and in poor health. The premiums on a policy insuring Victor could be much higher than the premiums for a policy insuring Wendy; this disparity may have to be resolved by some financial arrangement between the owners.

In addition, not every small company has 2 coowners. With 3 owners, each would have to own life insurance policies on 2 others, for a total of 6 policies.

Four owners would need 12 policies, and so on.

Regarding Redemptions Some of these cross-purchase problems can be resolved by using a corporate redemption plan.

Example 3: In a redemption plan, YT Corp. needs to buy only two life insurance policies: one on Wendy and the other on Victor. If Victor dies, the death benefit goes to YT, which uses the money to redeem Victor’s shares. If Wendy dies first, YT will

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continued on page 71

SEPTEMBER, 2018

Financial Management continued from page 70 buy her shares.

This method addresses the problems of multiple owners, uneven premium payments, and personal outlays for premiums. On the negative side, a redemption plan places what might be valuable insurance policies in the company’s possession, subject to creditors’ claims. Adverse tax issues also may arise, including the loss of a basis step-up for the surviving co-owner or owners.

Other ways to use life insurance for buy-sells may be suggested by an experienced insurance agent.

For instance, a trust might be created and funded by multiple co-owners, with an independent trustee acquiring life insurance policies on those owners’ lives.

The taxation of a trusteed buy-sell might be more favorable than taxation of a redemption plan. Your accountant can explain the likely tax consequences of any strategy you’re considering for funding a buy-sell through life insurance.

If your company initiates a buy-sell to be funded with life insurance, make sure to keep the policies up to date. If the company’s value grows but the coverage doesn’t increase, the insurance payout could be only a fraction of the required purchase price.

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Advertisers’ Index ATS Equipment, Inc. ................................................................... 20 Aggregate Industries - N.E. Region.............................................41 American Shoring, Inc...............................................Ins. Back Cvr. B2W Software, Inc....................................................................... 45 BakerCorp.................................................................................... 52 Boro Sand & Stone Corp............................................................. 52 Brennan Consulting..................................................................... 17 Dennis K. Burke, Inc.................................................................... 54 C&S Insurance Agency............................................................... 36 Concrete Systems, Inc................................................................. 14 Core & Main................................................................................... 2 Dagle Electrical Construction Corp............................................... 8 Darmody, Merlino & Co., LLP...................................................... 56 Dedham Recycled Gravel............................................................ 66 DeSanctis Insurance Agency, Inc. ............................................. 64 Dig Safe System, Inc................................................................... 62 The Driscoll Agency .................................................................... 68 EJ................................................................................................. 56 Eastern Pipe Service, LLP........................................................... 67 Eastern States Insurance Agency, Inc........................................ 47 Eastpoint Lasers, LLC................................................................. 71 T. L. Edwards, Inc........................................................................ 56 Ferguson Waterworks.................................................................... 9 Genalco, Inc................................................................................. 58 Gorilla Hydraulic Breakers........................................................... 29 L. Guerini Group, Inc................................................................... 52 HD Supply Const. & Industrial AH Harris/White Cap................. 16 Hinckley Allen LLP....................................................................... 18 Industrial Safety & Rescue.......................................................... 62 JESCO......................................................................................... 17 P. J. Keating Company................................................................. 30 P. A. Landers, Inc......................................................................... 38 Lawrence-Lynch Corp................................................................. 13 Leica Geosystems....................................................................... 54 Lorusso Corp................................................................................. 7 Lorusso Heavy Equipment, LLC.................................................. 48 MBO Precast, Inc......................................................................... 61 Mass Broken Stone Company..................................................... 58 Milton CAT.................................................................................... 12 Minuteman Trucks, Inc..................................................................11 Norfolk Power Equipment, Inc..................................................... 53 North American Crane & Rigging LLC........................................ 26 North East Shoring Equipment, LLC........................................... 71 Northland JCB............................................................................. 35 Ocean State Oil............................................................................ 53 Palmer Paving Corp..................................................................... 60 E. H. Perkins Construction Co., Inc............................................. 72 Podgurski Corp............................................................................ 66 E. J. Prescott, Inc...................................................... Ins. Front Cvr. Putnam Pipe Corporation............................................................ 64 Rain For Rent-New England........................................................ 28 Ritchie Bros. Auctioneers............................................................ 69 Rodman Ford Sales, Inc................................................................ 6 Rogers & Gray Insurance............................................................ 10 Schmidt Equipment, Inc....................................................Back Cvr. Scituate Concrete Products Corp................................................ 34 Scrap-It, Inc................................................................................. 57 Shea Concrete Products, Inc. .................................................... 44 SITECH New England................................................................. 42 Smith Print.................................................................................... 66 Starkweather & Shepley Ins. Brokerage, Inc.............................. 32 StormTrap, LLC............................................................................ 23 Taylor Oil Company..................................................................... 39 Tonry Insurance Group, Inc......................................................... 70 United Concrete Products........................................................... 29 United Rentals Trench Safety...................................................... 46 Webster One Source................................................................... 22 C. N. Wood Co., Inc. ..................................................................... 4 Woodco Machinery, Inc............................................................... 24 Xylem Dewatering Solutions Inc.................................................. 23

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

SEPTEMBER, 2018

• We can provide you with the world’s largest or smallest trench box or shoring system • Get high production numbers while keeping your workers safe • We will show you how with our on-site supervision.

• Contact us for the world’s very best shoring

SALES RENTALS SERVICE REPAIRS TRADE-INS RECERTIFICATION

• We will deliver on time, every time.

We’ll bring it with our fleet of trucks; where you want it, E when you want it, EVERYTIM • We have been told by our customers that “no one beats our service” So don’t take our word for it, just ask the people who use our product

See Our Entire Line Call for Catalogs

Factory & Corporate Office: 207 LAKE STREET (Route 32) NEWBURGH, NY, 12550

1.845.562.4477

Call us for local Metropolitan New York, New Jersey and Connecticut Inquiries.

Factory Direct Stores: For New England: Maine, Vermont, New Hampshire and Western NY State

Call our Boston area location: 283 E Cherry Street Shrewsbury, MA 01545

1.508.842.2822

For the Mid- Atlantic Region: Eastern Pa, So. Jersey, Delaware, Maryland and Virginia

Slide System with Portable Safety Rail Installed

Call our Baltimore area location: 506 Pulaski Highway Joppa, MD 21085

1.443.313.3461

Or Phone us Toll Free from anywhere:

1-800-407-4674