Utility and Transportation Contractor December 2016

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President’s Message FINALLY! After 28 long years, the State Senate and Assembly passed legislation to increase the gas tax in New Jersey to fund the Transportation Trust Fund that was signed into law soon after by the Governor. Not only did the gas tax pass, but we were also successful with a Constitutional dedication of the funds through a successful “YES” vote on Ballot Question #2. The passage of the gas tax will provide funding stability for an eight year period at approximately two billion dollars per year.

The UTCA has worked very hard on this matter for many years starting back in 1988 when our very own Michael D’Annunzio was UTCA’s President. I would like to thank each and every member, associate member, board member and past presidents who have worked tirelessly on this initiative to provide stabilized funding for our industry.

I would also like to thank all the staff members that were involved during this period as well. Special thanks go to Bob Briant, Jr. and Anthony Attanasio for connecting the proverbial dots needed to make our efforts a success. Lastly, I would like to thank those elected officials who had the courage to step up to the plate and educate our state on this very important economic subject. Great job, well done by all!

Our hard work and dedication must continue going forward as to solidify funding in all areas of our industry including awareness to our rapidly aging infrastructure.

The Association is embarking on a long-term campaign to bring greater awareness to our aging water and sewer infrastructure network. The staff at UTCA is working to build a coalition of stakeholders that will be aimed at educating, advocating and ultimately securing increased funding for this investment in a sustainable manner.

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On behalf of the Board of Directors, I would like to thank Dennis Hart for his years of service at the UTCA. Dennis has decided to move on to a new venture in his life and will be sorely missed by everyone at the association. Dennis has been a tremendous asset and always conducted himself as a true professional throughout his tenure. I know that I speak for all of the Members, Associate Members, Board of Directors, and staff when I say that we wish you nothing but the best on your new journey!

It was great to see everyone at the Fall Sporting Clay event at Lehigh Valley Sporting Clays in Coplay, PA. We continue to have tremendous turnout for this event and it remains a huge cornerstone for our UTCA Scholarship Fund!

I would also like to congratulate JRCRUZ, on celebrating its 15th year anniversary in business and also Jersey Precast on celebrating its 35th year. Two quality firms that know what it takes to succeed in our industry.

Finally, I want to wish each of you a very healthy and happy holiday season and look forward to working with all of you to make 2017 a successful and productive year.

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DECEMBER 2016

Contents

Volume XLI, Number 6

Published Bimonthly During 2016 Office Address: 1670 Route 34 North Farmingdale, NJ 07727 Mailing Address: PO Box 728 Allenwood, NJ 08720 (732) 292-4300 FAX: (732) 292-4310 www.utcanj.org Publisher: Robert A. Briant, Jr. Editor: Helene Nasdeo

Features 5

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JRCRUZ Corp. Celebrates 15 Years In Business Jersey Precast Celebrates 35 Years In Business A Message From Senator Steve Oroho Executive Disability Insurance: Women Need Paycheck Protection, Too How Drones Can Safely Raise Your Firm To New Heights

Editorial Contributors: Anthony Attanasio Dan Neville Advertising Manager: Helene Nasdeo Photographer: Image Up Cover Photo: Image Up Production/Graphics: Lauren Hagan Helene Nasdeo Circulation: Helene Nasdeo

Departments 2 24 31 39 56 64 72

President’s Message Legislative News Financial Overview Legal Dig Safety Perspective Accounting Corner Labor Relations

Printed By: American Plus Printers Affiliations: ARTBA Clean Water Construction Coalition Water Infrastructure Network UTILITY AND TRANSPORTATION CONTRACTOR (ISSN 0192-4843) is published six times a year by the Utility and Transportation Contractors Association of New Jersey, 1670 Highway 34 North, Farmingdale, NJ 07727.

Periodical postage paid at Farmingdale, NJ and additional mailing offices. POSTMASTER: Send address changes to UTILITY AND TRANSPORTATION CONTRACTOR, PO Box 728, Allenwood, NJ 08720.

Cover

Pictured on the Cover, standing left to right, Peter Lauro, Jr., Jason Cruz, Matthew Cruz and Carlos Catao. Sitting left to right are Evarett Cruz, Jr. and David Cruz

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Cover Story

JRCRUZ CORP. CELEBRATES 15 YEARS IN BUSINESS

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By: Anthony Attanasio, Executive Director

ver the last 65 years, the Cruz family has been one of the main players of the construction industry in the Northeast United States. Starting in 1951 with the founding of the Cruz Construction Company by his father, Evaristo, Sr., Evaristo (Evarett) Cruz was destined to live a life in and around construction. That life has now led to his own company’s (JRCRUZ) completion of 15 years

in business. JRCRUZ provides a variety of construction services to a wide array of both public and private clients in the Northeast United States. Specifically, they are known for high quality waste water, water supply, transportation and site work construction services. Like so many companies in our industry, Evarett’s story is one of family, challenges, taking risks and ultimately achieving success through hard work and dedication.

The Cruz Construction Company was formed in the Ironbound section of Newark the year Evarett was born. For 14 years, until his retirement in 1965, Evarett’s father worked to build up his company so that he could hand it off to his sons and a nephew for its continued growth and success.

Evarett began working for the company while still in high school. In those earlier years he was given all the “punch list” jobs and as he refers to it “headache work.” Evarett attributes this early introduction to resolving punch lists to his resolve for building projects the right way the first time, every time. All the way through high school graduation in 1970, Evarett began learning the ins and outs of the construction industry from the ground up. After graduation, he spent two years before college working full time on increasingly difficult projects and continued to climb the ladder of the company’s hierarchy.

In 1972, Evarett left working full time for Cruz Construction in order to obtain a B.S. degree in Civil Engineering Technology from NJIT. He went on to secure his Professional Engineers License

Evarett Cruz with his brother, Edward Cruz on a Project in Trenton, NJ in 1978.

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Pictured from left: Peter Lauro, Jr., Matthew Cruz, Jason Cruz, Antonio Fazendeiro, Chuck Lada, Joseph Walsh, Jim Benson, Carlos Catao, Chris Lada, Mohammad Subrati, Evarett Cruz, Jr., Faheem Khan, Helder Ferreira and David Cruz.

with registrations in New Jersey, New York and Connecticut.

In 1976 upon returning full time to the company after college, Evarett continued to take on a larger role in the company, first as an Assistant Superintendent, then as Superintendent, and onto Project Manager managing projects throughout New Jersey, New York and Connecticut.

Learning the ropes and every aspect of the business starting in his early years was so critical for what happened next with the Cruz family. In 1984 Evarett’s older brother, Ed, and their cousin, Evaristo G. Cruz, who Evarett credits as having been great mentors to him in his early career, left Cruz Construction to form E.E. CRUZ. At 33 years old, Evarett became the Managing Member of Cruz Construction Co. and the company began to see a new period of growth and accomplishment. For the next thirteen years, Evarett continued to navigate the company through unchartered waters as it began to tackle increasingly diverse construction disciplines, including heavy highway work and all types of water and sewer projects both on land and marine. In 1990 Evarett and his team put the Cruz Construction Co. on the map in the trenchless technology world as they became one of the first micro-tunnel contractors in the United States.

Micro-tunneling was virtually unheard of here at the time and Evarett and his Cruz Construction Co. blazed a new path that JRCRUZ continues to lead to this day. At the time, the company introduced several new techniques to the U.S. construction market including sunken caisson construction for the deep shafts required on some micro-tunneling projects. While sunken caissons were

Engineers and Project Managers discussing a bid.

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more widely used in Europe, Evarett was once again trailblazing on this side of the Atlantic. This technique presented the ability to avoid dewatering on certain projects which was critical in the water rich environments of New Jersey and New York. Cruz Construction Co. first used this technique in 1990 on a project in New York City that led to the installation of a 100 foot deep interceptor sewer. In 1992, in recognition of these new and innovative construction techniques, Evarett was one of a handful of individuals in the United States to be selected to receive the Medal of Excellence Award from Engineering News Record (ENR). This feat was also highlighted in a feature cover article in Civil Engineering Magazine in December 1992.

In 1997, with the passing of Evaristo Sr., Evarett sold his interest in Cruz Construction Co. and took two years off starting in 1999 to reflect on his “second act”. Evarett wasted no time however, as he spent the next two years dedicated to “quality time” with his wife and three boys. In fact if you ask Evarett what achievement he is most proud of in his life, it is how his family has come together.

Evarett and his wife, Joyce, would literally spend all of their free time with the boys raising them in the tradition of the Cruz work ethic into what they have become today. After recharging his batteries and creating family memories he cherishes to this day, Evarett Cruz began the next and even more successful chapter of his career with the founding in 2001 of JRCRUZ Corporation.

From its inception, JRCRUZ has achieved all of its goals and then some. Starting right out of the gate with a $20 million job in Staten Island, NY that required complex open cut and microtunneling elements, Evarett was able to attract top-notch talent and continued to win more and more complex and lucrative projects.

Due to the versatility of skills Evarett attained during his time with Cruz Construction Co., JRCRUZ Corp. has enjoyed an uninterrupted 15 years of success regardless of which markets were booming and which were drying up.

In 2014, there was a resurgence of projects that micro-tunneling were uniquely and ideally suited for. This boom in the microtunneling market allowed JRCRUZ to make major investments in new equipment, staff and the ability to have a more mobile operation. Through the utilization of technology and his employee’s technical expertise, Evarett was staying several steps ahead of his competitors in ways that are not available in other disciplines.

Today, JRCRUZ is operating at peak performance and the future is extremely bright for this family business that is now in its third generation. Evarett beams with pride when talking about his Utility and Transportation Contractor, DECEMBER 2016

JRCRUZ’s shop staff gathered around some of the Microtunnel Equipment they own.

three sons that are now all managers in the company. David (36), Matthew (28) and Jason (27) all play integral roles in the day to day operations of JRCRUZ. David serves as a General Superintendent, Matthew is a Project Manager and Estimator and Jason is also a Project Manager and Estimator. Together, Evarett and his sons oversee a company that has grown to 150 employees and manages a robust book of business. JRCRUZ is a fully union company employing laborers, operating engineers, carpenters, dockbuilders and timbermen to name a few.

With great success comes an understanding of the industry and the challenges it faces. Evarett sees consistent funding as the biggest challenge to his company and the industry. In water and sewer construction, when it was funded, the Clean Water Act put many companies in business and kept them busy. The Clean Water Act helped create sprawl which led to the creation of dozens of sewer authorities, pipeline projects and regionalized treatment plants. In the 1980s, President Ronald Reagan wanted to refocus the program on America’s cities and end “sprawl”. The reduction in funding for this program had two immediate results. Contractors either learned to take on new disciplines like heavy and highway work

or they were forced to fold their tent. Companies like Evarett’s learned to adapt and survived.

In the 1990s and beyond, the big water/sewer jobs that Evarett feels are truly his specialty became rare or nonexistent. So Evarett did what many contractors have tried, but few have achieved, by successfully transitioning his company into highway work and micro-tunneling. Today JRCRUZ performs much of its work outside of New Jersey. He hopes that with the passing of the Transportation Trust Fund renewal and gas tax “thanks in part to the UTCA”, more work will come back to New Jersey and he looks forward to that day. Evarett and his family live in New Jersey and he keeps his company based here. He is extremely proud of being able to adapt to projects of diverse complexity and working conditions. He also recognizes how difficult it is becoming to pass down a business like his to the next generation, which is why you can see his eyes light up when talking about his boys and the incredibly smooth transition that is taking place at JRCRUZ. “In construction the relationships you build and maintain with the project owners, unions and engineers are hard to get off the ground and even harder to maintain. My sons have proven invaluable with the working relationships they have created that lead to one successful project after the next in the Northeast United States which is one of the hardest places to build in the world.”

Evarett is grateful not only for his family and its history but also for his membership and involvement in the UTCA. He is very proud to serve on the UTCA Board of Directors and is quick to point out how attentive the Association is to its members and their needs. What he appreciates most about the Association and its staff is their aggressiveness and the results that come with it.

Don’t expect an invitation to Evarett’s retirement party any time soon. While he and his wife Joyce are enjoying a bit of a slowdown thanks to the added responsibility their sons continue to take on, Evarett is still having fun. He receives great joy and pride out of working so closely with his sons and is excited for the next big challenge that JRCRUZ will take on as they continue to build upon the Cruz family legacy.

JRCRUZ nears completion of the Staten Island waterfront development project.

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Featured Article

JERSEY PRECAST CELEBRATES 35 YEARS IN BUSINESS

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By: Anthony Attanasio, Executive Director

ersey Precast takes great pride in not only completing 35 years in business, but also in celebrating the team that has developed and the reputation they have earned for themselves and the company. Jersey Precast has three cores values: safety, quality and customer satisfaction. Binding these values together is the overarching principle of integrity. If there is any one characteristic or trait that the leadership wants this company to be associated with, it is integrity. Integrity towards coworkers, customers and anyone that this company does business with. Adherence to these values and a true team approach has led to more than $500 million dollars in completed projects and a reputation as one of the preeminent precast producers in the Northeast.

The story of Jersey Precast begins in 1981 with Virgil Carroll and a small shed in New Brunswick. Virgil was a special man. He was totally unassuming with an ingrained penchant for hard work and ingenuity. A special and very funny story about the early days of Jersey Precast illustrates how Virgil set the company on the path that it continues to follow today. One day the shed that housed the company’s first plant caught fire and burned down. Everything was destroyed except for Virgil’s determination to succeed. So the next day, he simply moved the operation to a vacant building across the street. Several days later the building’s owner showed up and discovered for the first time that he had a new tenant. After an initial uncomfortable encounter, things were sorted out and the unwillingness to let obstacles or challenges stop the growth and success of Jersey Precast is what endures to this day.

Jersey Precast is led by Amir Ulislam, who was born in Pakistan and came to the United States in 1986. He attended Auburn University and began working in the construction industry immediately after graduation. From 1988-1993 he worked at Cris-Tec Associates before spending the next four years with Kiska Con-

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struction. While working at Cris-Tec, Amir attended NJIT and received his Master’s Degree in Construction Management and then went on to attain his Professional Engineer’s license.

Since 1981, the story of Jersey Precast has been one of continuing success. From humble beginnings with fewer than 20 employees and working out of a small plant in New Brunswick, the company is now one of the largest pre-cast producers in the Northeast.

In 2003 Jersey Precast acquired Concrete Safety Systems and became a multistate operation.

During this time, the company has developed the expertise and experience to provide a wide variety of products to heavy highway and infrastructure Amir Ulislam projects. The

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company now boasts approximately 200 employees and consistent annual sales in the $40-45 million range.

Jersey Precast has always placed an emphasis on its leadership team and staff by assembling a group of construction industry professionals with extensive experience in the construction environment. This enables the team to understand the needs and requirements of their customers much better than other professionals whose experience is limited to the precast field. Most of the leadership team has been at Jersey Precast for at least 10 and in some cases more than 15 years.

In addition to top-notch employees, the company has significant physical resources to meet the demands of its customers. In 2007 the company’s headquarters moved to its current location in Hamilton. The new facility, along with their Pennsylvania location that came with the acquisition of Concrete Safety Systems, allows Jersey Precast to make all of the products their clients need in a one stop shop. Between the two plants, the company has over 250,000 sqft. of indoor manufacturing space over more than 40 acres. The company prepares almost all of its shop drawings in house, and transports 80% of its products to job-sites with its own fleet.

Over the years, Jersey Precast has become a leader in producing a large array of products that are utilized in a multitude of different business disciplines. Jersey Precast proudly produces all aspects of bridge construction with a focus on bridge beams and decks. Their work has been a part of some of the highest profile bridge jobs in the Northeast. As part of the Manhattan West Project, Jersey

RKF Bridge (Triboro Bridge): Replacement of deck slab

Precast became the only precast producer in the NY metropolitan area to have undertaken and completed a project involving prestressed segmental construction. Their products have been a part of the Tappan Zee Bridge Deck Replacement, the Pulaski Skyway, the FDR Drive Reconstruction, the RFK Bridge (formerly Triboro Bridge), Brooklyn Bridge as well as many other high profile heavy highway projects. They have also produced several parking garage projects for many high profile clients including BMW North America, Jet Blue, Toyota and the LaGuardia Airport West Garage.

In addition, Jersey Precast produces marine structures, architectural concrete, industrial/facilities construction materials, rail stations and more. One project that brings great pride to the company is the Rutgers Football Stadium Expansion. With the success of the football team during the Greg Schiano era, the school embarked on a major expansion of the football stadium as part of its efforts to be accepted as a member of the Big Ten Conference. Jersey Precast was responsible for the fabrication, delivery and erection of all of the precast components of the new state of the art facility.

“It is no longer sufficient to simply deliver a project on-time.

We must constantly strive to realize increased efficiencies and the services we provide must be unique.” - Amir Ulislam

Even with all of his company’s achievements, Amir recognizes that the construction and precast industries are constantly evolving. “It is no longer sufficient to simply deliver a project on-time.

We must constantly strive to realize increased efficiencies and the services we provide must be unique.” He believes that it is increasingly important that precast producers be an active participant in the design development process and must have the necessary expertise and breadth of experience to guide a project towards the best value solution.

The company takes great pride in the fact that even as they continue to grow their service footprint, 90% of the business continues to be with repeat customers.

Reaching the milestone of 35 years in business is something the company relishes, but they are more excited about what the future holds in store. Amir recognizes the growth and development the company has enjoyed over the years and looks forward to continuing to improve the operation for his customers for many years to come. When he looks at the past, the resources they now have, the expertise they’ve acquired and above all the young and promising leadership that he is grooming, he clearly sees that Jersey Precast’s best years still lie ahead.

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Providing A Reliable Transportation Infrastructure While Providing Tax Relief By: Senator Steve Oroho (R-24) New Jersey is the most-densely populated state and is sandwiched between two of the largest metropolitan areas in the country. Our quality of life and state economy rely upon safe, effective and efficient transportation infrastructure to move people and products. These are facts that everyone can acknowledge.

To fund our roads and bridges, we needed a reliable, dedicated source of revenue for the Transportation Trust Fund (TTF). So I worked diligently with Senator Paul Sarlo for months on a bipartisan plan to accomplish that. Using that as a basis, Governor Chris Christie, Senate President Steve Sweeney and Assembly Speaker Vinny Prieto ultimately reached a compromise that replenishes the TTF to a healthy status and provides meaningful tax relief, including the first broad-based tax cut for New Jersey residents since 1994. The plan will annually invest a record $2 billion over eight years to improve transportation across New Jersey, with several hundreds or thousands of dollars in net tax relief for all New Jerseyans.

It is significant that the State finally acted responsibly to tackle the transportation infrastructure funding crisis without running up the debt on our credit card and kicking the can down the road yet again. Additionally, we no longer will subsidize out-of-state drivers for using our roads and bridges, and local transportation aid to counties and municipalities has been doubled which provides measurable property tax relief.

The continued borrowing over decades to pay for new transportation construction and to maintain and repair existing roads and bridges became too big a hole and was a predominant reason the TTF went bankrupt over the summer. No one wants to raise taxes, but if we just indexed the gas tax to keep up with inflation since its inception we would not have reached the crisis stage. Since 1988, New Jersey had charged drivers the same 14 1/2 cents a gallon of gas to maintain and repair our roads and bridges. The price hadn't gone up in 28 years.

Other states have raised their gas taxes in line with inflation.

New York charges over 40 cents a gallon and Pennsylvania over 50 cents. If New Jersey had raised its price little by little, in line with inflation, that 14 1/2 cents would have been 29 cents today.

What happened instead was that TTF spending was uncapped in the 1990's and successive administrations extended the life of the debt so they could borrow and spend more. Again and again, administrations reached into its general fund by diverting increasing amounts of sales tax revenue in order to go to Wall Street and borrow more, which made New Jersey's fiscal crisis continually worse. They spent more but didn't raise the tax to pay for it. Today it takes all of that 14 1/2 cents plus the first 10 1/2 cents of the gas tax increase just to pay the cost of the existing debt.

As more and more sales tax was diverted from the State’s general fund, other taxes and fees were raised on New Jersey residents to plug the hole. This in turn led to the outmigration of personal wealth and job-creating capital.

So when the TTF went broke this summer, road and bridge maintenance and repair stopped.

There was simply no money to pay for it. And because of the mistakes made in the past, the gas tax or property tax or some other tax had to be raised or our transportation infrastructure would have continued to crumble which would have been disastrous for our economy.

Obviously, the gas tax made the most sense. The gas tax is a user fee. Even former President Ronald Reagan believed it was the fairest way of paying for road and bridge maintenance, repair, and construction - charge the drivers who use it.

The gas tax is also fairer to the taxpayers of New Jersey. New Jersey is a pass-through state on the busiest travelled corridor on the East Coast. I-95 is the nation's busiest road. A third of those who use New Jersey's roads and bridges are from out-of-state. Instead of raising the gas tax, for years New Jersey had borrowed more and paid increasingly more interest on that debt. In effect, New Jersey taxpayers were paying interest on debt in order to subsidize the out-of-state drivers who are using our roads and bridges all at the 1988 price per gallon. The only way to get these outof-state drivers to pay their fair share was through a users' tax on gasoline. Without the gas tax increase, local road and bridge maintenance and repair would have had to have been paid for in higher county and local property taxes.

So with the governor’s signing of the bipartisan legislation we begin to finally address several monumental structural problems facing New Jersey concurrently. Recognizing that a sound, wellmaintained transportation infrastructure is key to our economic vitality, we are now making the appropriate, critical investment in it. And from a competitive economic standpoint, the most pressing issue we confront is how to stem the outmigration of capital, income and jobs away from New Jersey. This monumental tax restructuring measure, the largest and most comprehensive tax cut in our state’s history, will act to keep financial resources in New Jersey, thereby improving our overall economy and general state revenues.

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This plan also achieves tax fairness by implementing a series of targeted tax cuts that far exceed the increase in the gas tax and begins to rebrand New Jersey as a place where capital investment is welcomed and residents can afford to retire. In crafting this agreement, I, as well as the governor, insisted on tax cuts to offset the gas tax increase, and this legislation delivers on that promise in a number of areas.

If you are a consumer, which is everyone in the state, this plan makes products cheaper by lowering the sales tax.

If you are struggling worker trying to live on low wages, this plan increases the Earned Income Tax Credit from 30 percent to 35 percent.

If you are a retiree, we exclude you from income taxes on your hard-earned, often double-taxed pension and retirement incomes.

When this state income tax elimination on up to $100,000 of retirement income is fully implemented, 90 percent of senior citizens will receive a state income tax reduction, with eight out of every ten senior citizens paying zero income tax on their retirement income. This will greatly reduce the incentive for retirees to leave New Jersey, ensuring that capital remains in the state and generations of families can stay together here to the benefit of our society.

If you are a member of the military or National Guard, we honor

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and reward you for your service to our country by providing an additional personal exemption of $3,000 on your state income taxes.

If you are part of a family business or the owner of a moderately priced home, we will finally eliminate the estate tax to make it affordable to be with your family as you age. This will encourage residents and employers to stay in the state, strengthening families, enriching society and strengthening the economy.

And if you are a driver, you stand to see an annual reduction in vehicle repair costs of $600 which is the average spent per year by New Jersey drivers due to bad road conditions, according to the state and U.S. departments of transportation.

On the whole, this agreement is a good deal for our state, our residents, and our transportation infrastructure.‎ It’s a bipartisan compromise which protects the roads and bridges that are the bloodstream of our economy and lowers taxes for seniors, veterans, small businesses, low-income workers and everyone who shops in New Jersey. I am proud to have worked with the governor and leaders of both parties to find a delicate balance between prioritizing the immense transportation needs of a bustling state while ensuring that New Jersey residents benefit from tax relief.

This plan truly represents a strong start for New Jersey’s future.

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Legislative News

FEDERAL & STATE UPDATE By: Anthony Attanasio, Executive Director “What a long strange trip it’s been.” Jerry Garcia After almost 30 years, and an extremely intense battle over the last three years to pass a long-term, robust and sustainable Transportation Trust Fund (TTF) renewal, I am sure I speak for the entire construction community when I say we never expected a battle over whether to dedicate the funding we fought so hard to attain. UTCA was at the forefront in passing a $.23 gas tax as part of a larger tax reform effort to replenish the bankrupt TTF. Even though it defies logic, UTCA was forced to spend the final weeks prior to year’s election fighting to constitutionally dedicate the new gas tax revenue. The good news is that we fought hard, and were victorious. Opposition to what was always considered the most obvious part of the TTF renewal, dedicating the revenue to its intended purpose, came from two individuals in particular.

First, a certain talking head on NJ 101.5, who fought led a failed campaign to stop the tax reform plan that will benefit New Jersey taxpayers and their infrastructure, decided the next logical battle was to oppose dedicating it to transportation. By not dedicating the revenue, future Governors and legislatures would be able to raid transportation funding during the budget process and use it for other purposes. As crazy as that may seem, what was even stranger was that he was able to enlist our own Lieutenant Governor, Kim Guagdano, in his ill-fated misadventure. Together, they proceeded to mislead the public on what a “no” vote on Ballot Question #2 meant for the State. The voters were being misled to believe that by voting no they were voting against the gas tax, or that a no vote would prevent the Transportation Trust Fund Authority from borrowing the necessary funds to complete the annual capital program. Both of these assertions were false. The need to dedicate transportation funding was such an obvious position to take that several individuals and groups who had previously opposed the 24

TTF renewal itself came out in support of Question #2 including Americans for Prosperity and Assemblyman Jack Ciattarelli.

Thankfully, after well-crafted campaigns by Forward New Jersey and Road to Repair, and multiple statements from the Chamber of Commerce, New Jersey Business and Industry Association, AAA, AARP, UTCA and many other advocates, the voters saw through the misinformation campaign and voted yes on Question #2 by a healthy margin.

Now that the industry has secured stable transportation funding for the next eight years, our focus is shifting to water and sewer funding and the need to address the crisis underground. One UTCA measure that we have been working through the legislative process reached a new milestone in November. A1649/S853 would require local governments and authorities to obtain financing cost estimates from the NJ Environmental Infrastructure Trust (NJEIT) for certain projects. The measure was introduced in the State Senate and passed unanimously out of the Senate Environment and Energy Committee. The bill now heads to a floor vote by the full Senate. The Assembly version of the bill passed out of the lower house in May by a vote of 69-3. UTCA has also supported several other clean water bills that have been introduced in the wake of the Flint Michigan lead crisis. The Association is also beginning the process of a larger more comprehensive effort to bring attention to our water/sewer infrastructure needs and looks forward to an aggressive campaign to educate elected officials and the public on the benefit of investing in water/sewer infrastructure.

Finally, UTCA staff is in the last round of stakeholder outreach prior to seeking sponsors for legislation that would standardize the process for changed conditions on public works projects. Working with our friends at the NJ Society of Municipal Engineers, and with the help of the UTCA legislative committee and UTCA Utility and Transportation Contractor, DECEMBER 2016

counsel, Paul Fader and Adrienne Isacoff, the final language will be shared with legislative sponsors and the Association will seek introduction of a bill before the New Year.

Federal Update November brought a significant new look to the federal landscape for the infrastructure industry. Shortly after his election, President-Elect Donald Trump immediately began emphasizing the need for a significant increase in infrastructure spending in America. While he has not put forth a detailed plan as of yet, he has spoken repeatedly about the need to invest in infrastructure and we are encouraged by his strong statements in favor of such a critical issue.

One of the industry’s greatest opponents in the New Jersey delegation, Congressman Scott Garret (NJ-5), was defeated for re-election. Congressman Garrett had repeatedly fought again funding infrastructure, including voting against the recently passed F.A.S.T. Act. He refused meetings with the industry and even advocated for devolution of transportation funding. Newcomer Josh Gottheimer, who made investing in transportation infrastructure a main plank of his campaign, defeated Congressman Garrett by an impressive margin in a Republican district. In addition to the support of the UTCA, the American Road and Transportation Builders Association (ARTBA) endorsed Gottheimer. We wish Congressman-Elect Gottheimer great success in the 115th Congress.

Finally, the New Jersey Congressional delegation will see a significant increase in its power in Washington D.C. When the 115th Congress convenes in January, it is anticipated that Congressman Rodney Frelinghuysen (NJ-11) will become the new Chairman of the House Appropriations Committee. Congressman Frelinghuysen has spent several years as the Chair of the Appropriations Defense Subcommittee. The Appropriations Committee is one of the Big 3 House panels and is the Committee that writes the annual federal spending bills. New Jersey can only benefit from a member of its delegation taking on such a prestigious position. We hope to be able to congratulate Congressman Frelinghuysen in the New Year.

PLEASE CONSIDER SUPPORTING UTCA’S CONSTRUCTORS FOR GOOD GOVERNMENT PAC UTCA continues to be the leading voice in Trenton and Washington D.C. for the construction industry. Whether it is providing expert testimony before business and legislative groups or positively effecting the legislative process, UTCA stands alone in its record of achievement for our industry. This success is only made possible by your support of the Association, and more importantly, with your support of the industry’s PAC: Constructors for Good Government. Please consider making a contribution in 2016 as UTCA plans to be very active in the upcoming legislative session and a robust PAC only strengthens our voice. Thank you for your continued support.

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Financial Overview

THE VALUE PROPOSITION By: William J. Ruckert, Provident Bank

The election season is over, the incoming administration has voiced its commitment to building the country’s infrastructure and New Jersey has voted to dedicate the new “gastax” to the Transportation Trust Fund. All of these factors point to an improved economic climate, but leveraging them effectively lies in being both a recipient and supplier of the “Value Proposition.”

Many experts have described the Value Proposition, but defining what it is and how to deliver it tends to be far more difficult. Adding value is unique to individuals, companies, industries and to some extent, cultures. While the delivery channels are discernible, the characteristics within them are far reaching. Passion, loyalty, integrity, communication, accountability, professionalism, expertise, attitude and flexibility are just a few examples of characteristics that contribute to the Value Proposition. Combining these elements and tailoring them to specific situations provides a unique relationship that benefits all parties.

The individual needs of contractors, suppliers and industry professionals are unique to their businesses. Delivering on the Value Proposition means understanding those unique needs and customizing solutions individually, not en masse.

A collaborative approach is however necessary since every situation is different, and a mutual understanding is paramount. In other words, expectations cannot be met unless understood and communicated.

With the DOT shutdown, a stagnant economy, cynicism of the future and other factors, 2016 has been a difficult year for the construction industry. These difficulties are likely to be seen in year-end financial statements which may cause

some uneasiness among bankers and sureties. With uncertainty looming, it is critical business owners, CFOs, CPAs and others, have open dialogue with their financial institutions/insurance companies.

Expectations of financial results not only for this year, but for 2017 and beyond will be necessary to set goals in both the short and long term. The industry is finally seeing some positive economic signs, which are likely to cause financing needs to grow. As such, new loan requests can be expected, higher bonding coverage will be needed, loan covenants must be modified, the employee base will grow and overhead along with it. A mutual understanding of these elements between you and the financing sources that support your business must be in place in order for you to effectively leverage an improved economic climate. Open and interactive communication of these factors is integral for all parties and their ability to deliver the Value Proposition.

With “Commitment you can Count on” as our tagline, Provident Bank’s ability to deliver on that promise was recently recognized by Forbes who honored us as a Best Bank for 2016. Our commitment to strong relationships in both good and bad times is evidence of the Bank’s Value Proposition. As this year wraps up, I urge you to evaluate the Value Proposition of your current bank. If it is not matching your expectations, perhaps you should consider a new institution.

About The Author . . .Wm. J. Ruckert III is Senior Vice President of Middle Market Lending at Provident Bank. Based in Provident’s Iselin office, Ruckert oversees commercial financing for companies with sales of $15 million or more. He holds a bachelor’s degree in business administration from Loyola College in Maryland.

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Legal Dig

AVOIDING THE PITFALLS OF APPARENT AUTHORITY IN PUBLIC CONTRACTS

By Paul T. Fader, Esq., Association Legal Counsel & Dorthy A. Koncur, Esq.

Contractors often find themselves in a bind when they seek to be paid for work performed under a public contract’s change order only to be informed that that change order was not authorized and payment denied. Ordinarily, an employee of a private entity can bind that entity based upon his or her “apparent authority”. However, public bodies are generally not bound by the conduct of their employees that has not been expressly authorized. Contractors are held responsible for knowing the law and recognizing the circumstances when the conduct of a public employee, for example a municipal engineer, may bind his or her employer to a specific contract or change order. Thus, knowing who can and cannot bind a public entity is crucial as the consequences can be substantial.

The New Jersey Supreme Court has explained that an “agency relationship is created when one person (a principal) manifests assent to another person (an agent) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents to so act.” N.J. Lawyers’ Fund for Client Prot. V. Stewart Title Guar. Co., 203 N.J. 208 (2010) (quoting Restatement (Third) of Agency § 1.01 (2006)).

An agent acts under actual authority “when, at the time of taking the action that has legal consequences for the principal, the agent reasonably believes, in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act.” Id. (quoting Restatement (Third) of Agency § 2.01). However, where an agent lacks actual authority to act on a principal’s behalf, it may still bind the principal “by virtue of apparent authority based on manifestations of that authority by the principal.” Sears Morg.

Corp. v. Rose, 134 N.J. 326 (1993) (internal citations omitted).

Apparent authority “focuses on the reasonable expectations of third parties with whom an agent deals.” N.J. Lawyers’ Fund for Client Prot., 203 N.J. 208 (quoting Restatement (Third) of Agency

§ 7.08 cmt. b.) The inquiry focuses upon “whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with the business usages and nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question.”

Mann v. Interstate Fire & Cas. Co., 307 N.J. Super. 587 (App. Div. 1998), (quoting Am. Well Works v. Royal Indem. Co., 109 N.J.L. 104 (1932). Ambiguities may exist, for example as to whether a municipal engineer representing a public entity may authorize a contractor to perform extra work beyond the scope of the original contract. Nevertheless, a recent New Jersey Appellate Division decision reiterates that the onus is upon the contractor to know the relevant laws governing public employees’ exercise of their procedural and substantive discretion.

In Advanced Enterprises Recycling, Inc. v. Gloucester County Improvement Authority, (Docket No. A-2396-14T1, decided August 31, 2016), a recycling service provider, Advanced Recycling, Inc. (“Advanced”), initiated a lawsuit against a public entity, Gloucester County Improvement Authority (“GCIA”), regarding a dispute pertaining to the price per ton for the disposal of waste at a landfill managed by GCIA. Pursuant to the parties’ contract, the GCIA agreed to accept up to a maximum of 246,000 tons of waste per year and an initial draft of the agreement outlined the parties’ respective obligations for tipping fees.

Prior to executing the agreement, Advanced’s Vice President, Scott Cunningham (“Cunningham”) met with Tom Sullivan (“Sullivan”), an administrator at the GCIA’s landfill. Following the meeting, Sullivan forwarded a proposed agreement on behalf of GCIA to Cunningham, who returned a revised draft of the initial agreement with price modifications beneficial to Advanced. Sullivan met Cunningham to discuss the pricing structure and after

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clarifying the pricing options, Cunningham reiterated Advanced’s position which conflicted with GCIA’s understanding of the pricing structure as relayed by Sullivan. Cunningham provided Sullivan with a signed version of the contract which contained the price changes advantageous to Advanced. Sullivan indicated that he would convey Advanced’s pricing changes to GCIA’s finance department. However, Sullivan failed to advise the finance department or anyone else at GCIA regarding the revisions to the pricing structure and the GCIA Board adopted by resolution the revised contract. As a result, GCIA approved a contract that was significantly different from the version that it initially proposed.

The trial court granted Advanced’s motion for summary judgment finding that GCIA was liable to Advance for $479,403 based upon the pricing structure contained in the revised agreement. The trial judge rejected GCIA’s argument that Sullivan lacked the authority to negotiate the tipping fees or amend the pricing structure. In relevant part, the judge noted “there’s a lot in the record, a good deal in the record that indicates Mr. Sullivan was, in fact, negotiating with other entities, with this particular plaintiff, and that he had more authority that’s [sic] being represented.” Id. at 8. The court also noted “that whether Sullivan had the ability to negotiate or not, eventually and ultimately the board approved the contract...” Id. Relying upon the principles of contract interpretation, the lower court determined that the language in the agreement was clear and that the parties’ entered into an enforceable contract.

The Appellate Division reversed and remanded the case back to the trial court finding that there were genuine issues of fact concerning whether Sullivan had the authority to negotiate the tipping fees and whether the GCIA was aware of the revision to the contract terms. The Appellate Division noted that the trial court’s conclusion as to Sullivan’s apparent authority failed to recognize the distinction “between the apparent authority of a representative of a governmental agency and the agent of a private company.” Id. at 12 (emphasis added). While contract principles are generally applicable to governmental agencies and private companies alike, there are significant distinctions with respect to an employees’ apparent authority to enter into contracts on behalf of a public entity. Id. citing Eugene McQuillin, The Law of Municipal Corporations, § 29.2 (3d Ed. revised 2009).

Public entities “enter into contracts only ‘by formal action’[.]”

Id. quoting City of Jersey City v. Roosevelt Stadium Marina, Inc., 210 N.J. Super. 315, 327 (App Div. 1986). Significantly, a public entity “cannot be bound in a contract, express or implied, unless the officer or employee has authority to enter into such a contract on behalf of the corporation.” Id. at 12-13.citing St. Barnabas Med. Ctr. v. Cty. of Essex, 111 N.J. 67, 69 (1998) (quoting Cooper Med. Ctr. v. Johnson, 204 N.J. Super. 79, 82 (Law Div. 1985).

Therefore, a public entity “is not bound by acts of its agents coming within the apparent scope of their power and authority. Their authority to act must be explicit and direct that the corporation be bound.” Id. at 13 quoting Giordini v. Mayor of Dover, 101 N.J.L. 444, 446 (Sup. Ct. 1925) (citations omitted).

Further, there is a presumption that private contractors who deal with public entity employees “operate with knowledge of relevant laws constraining the procedural and substantive discretion and authority of officials with whom they deal, and where applicable provisions are not followed, any agreements entered into are unenforceable, absent lawful ratification.” Id. quoting St. Barnabas, 111 N.J. at 77-78 (citations omitted). Therefore, “those seeking to deal with government employees ‘must take great care to learn the 40

nature and extent of their power and authority.’” Id. at 13, citing Aeromar C. Por. A. v. Port Auth. of New York & New Jersey, 536 NY.S. 2d 173, 176 (App. Div. 1988) (quoting McDonald v. Mayor of New York, 68 N.Y. 23, 27 (1876)). Accordingly, the Appellate Division reversed the lower court’s decision granting Advanced’s motion for summary judgment because there were ambiguities as to whether GCIA’s resolution authorizing the execution of the contract constituted “a deliberate and knowing ratification of the unauthorized action of its employee.” Id. at 14. The decision noted that “it would not be unreasonable for a jury, in considering these circumstances, to conclude that no formal contract was entered into at all as there was no meeting of the minds between the parties.” Id. Practice Tips The holding in this case serves as an important reminder of the distinctions between the principles of agency and contract law which are applicable to private and public contracts. Significantly, governmental bodies may only enter into contracts through formal action and cannot be bound by the apparent authority of an employee absent a “deliberate and knowing ratification of the authorized conduct of its employee.” Id. The law presumes that private contractors know the applicable laws that limit the authority of public entity employees. Determining the parameters of the authority of public entity employee, such as an engineer, however, may be a daunting task. Therefore, it is critical that contractors take precautions to avoid the pitfalls of apparent authority in the context of public contracts. The following guidelines are particularly relevant when dealing with public entities on contractual matters: 1. Insist upon being provided the name of each and every contracting officer who has the authority to issue contract modifications; 2. Request a written directive to proceed if the modification has not yet been adopted by resolution of the public entity; 3. Train employees to insist that directives related to cost be issued by the contracting officer, followed by resolution of the public entity; 4. Get directives in writing. Do not rely on verbal orders or representations; 5. Promptly request payment or contact counsel to assert a claim.

In the event that ambiguities arise, contractors should consult with their counsel in order to avoid any potential disputes or reach a satisfactory resolution that does not involve costly litigation.

The information contained herein is for informational purposes only as a service to the public, and is not legal advice or a substitute for legal counsel, nor does it constitute advertising or a solicitation.

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EXECUTIVE DISABILITY INSURANCE: Women Need Paycheck Protection, Too

By: Nancy Damato, Partner, RDA Benefit Services As successful owners of companies and high-level executives, women contribute a significant amount of income to the family budget—and may even be the sole breadwinner. Did you know that according to Pew Research, women are the main or only breadwinner in 40 percent of households with children under age 18?

With their day to day focus on growing their businesses, women tend to overlook the most important concern of all— protecting their paycheck. Benefits from employer-provided policies only cover a portion of income and can leave quite a large income gap. These benefits are generally taxable and are typically far from adequate to meet anyone’s needs. And if earnings include commissions or bonuses, the gap could be even greater. Keep in mind, too, that the average monthly benefit paid by Social Security Disability Insurance is only $1,004 per month. (Source: Social Security Administration, 2008) WHAT ARE THE CHANCES THAT YOU COULD BECOME DISABLED? Statistics show that women are more likely than men to experience a disability. According to the Council of Disability Awareness (CDA), 54% of new disability claims approved during 2012 were for women. The leading causes of disability claims today are: muscle and bone disorders, followed by cancer, injuries and cardiovascular issues. (Source: 2014 LTD claims review, Council for Disability Awareness). 90% of all disabilities before retirement age are due to an illness, not an injury. And since most disabilities are not work-related, they are not covered by worker’s compensation.

INDIVIDUAL DISABILITY INSURANCE OFFERS VALUABLE INCOME PROTECTION. When asked if they had enough money set aside to pay their bills without an income, 77% of people said they could not be out of work for longer than a year. Individual Executive Disability Insurance, being offered to UTCANJ association members by Mass Mutual Life Insurance Co., offers comprehensive income protection. These policies use the “own occupation” definition of disability, which is a very important feature of a disability policy. These policies cover mental and nervous conditions, in addition to physical disabilities.

These policies offer many additional benefits, including catastrophic disability insurance benefit rider, a partial disability benefit, rehabilitation benefit, survivor benefit, compassionate disability benefit, automatic benefit increase rider, group supplemental disability insurance benefit rider, future purchase option rider and indexed cost of living rider. Benefit periods can vary, but the maximum benefit period you can choose is now age 67, since people are staying in the workforce much longer now. Association members can receive up to a 25% discount off the individual rates for these plans—for both individual protection, as well as business overhead expense protection.

This valuable benefit with the association discounts is available exclusively through RDA Benefit Services LLC. For additional information about these plans and a complimentary, no-obligation quote, please contact Nancy Damato at 855-6930772 or 609-693-0772.

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Safety Perspective

A TRANSFORMATIONAL SAFETY PROGRAM By: David Zachry, President & CEO, Zachry Corp./ARTBA Chairman

The American Road & Transportation Builders Association has set out to forge a new safety frontier. We believe we’ve succeeded with the launch of the “Safety Certification for Transportation Project Professionals™” (SCTPP) program.

The aspirational mission of the certification program is clear: “To make transportation projects worldwide zero-incident zones for workers, motorists and pedestrians.”

Of course, the creation of such a groundbreaking initiative was three years in the making, and is a case study in team work.

We owe a big “thank you” to past ARTBA Chairmen Doug Black and Nick Ivanoff, whose leadership got the ball rolling, and to the Subject Matter Experts, who devoted many days to defining the program’s scope and crafting the exam questions.

We also owe a huge debt of gratitude to the Certification Commission Co-Chairs, David Walls of Austin Industries and Ross Myers of Allan Myers, the decades-long passionate safety leaders who are fully committed to making this program a success, along with their fellow commissioners, who were instrumental in developing policies to make it operational. Last, but certainly not least, a sincere and well-deserved recognition and appreciation is due to the senior ARTBA staff who have spent hundreds of hours of time bringing the final program to life, building the web and candidate management platforms, and preparing the marketing roll out.

As you read this article, keep in mind at least three things that make the SCTPP program unique.

First, this certification program, which is designed to meet 56

rigorous protocols required for accreditation by the International Organization for Standardization (ISO) and the American National Standards Institute (ANSI), is like no other because it is aimed specifically at the transportation construction industry.

Second, it is an organic creation; driven and developed by the industry’s brightest safety minds. Third, its wide-ranging scope means thousands of industry professionals are eligible to take the exam and demonstrate their safety mettle.

Though the work began several years ago, getting the SCTPP program off the ground was a critical focus of my first year agenda as ARTBA chairman. As I begin my second year, I look forward to working with all of you on its implementation and in encouraging your firm’s appropriate personnel to sit for the certification exam.

Our collective goal, working through ARTBA and its Foundation, is to cause a significant reduction in the number of deaths and injuries that occur on and around transportation project sites. Together, I know we can fundamentally transform our industry and save thousands of lives.

We now offer courses through our Online Learn¬ing Center, available on demand 24/7 via www.puttingsafetyfirst.org. The ARTBA Foundation was an early innova¬tor in developing a first-of-its-kind, web-based www.workzonesafety.org research library: the National Work Zone Safety Information Clearinghouse, which celebrates its 20th anniversary in 2017.

Reprinted with permission from American Road & Transportation Builders Association Utility and Transportation Contractor, DECEMBER 2016

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Congratulations To JRCRUZ Corp. and Jersey Precast

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Accounting Corner

GET READY FOR YEAR-END TAX FILINGS By: Bill McNamara, CPA, CCIFP, The Curchin Group

The end of the year is approaching and that means it’s time for your accounting and human resources departments to address some once a year items that, while tedious, are essential to compliance filings.

No item caused more confusion this year than the new healthcare reporting requirements. The number of questions and the raw number of hours invested by small businesses illustrates a growing importance in these areas. Some businesses view them as a nuisance, but anyone was has endured a visit from a taxing authority understands the large significance in staying compliant. The inherent risk in the preparation of these items is their very nature – we view them only at year end and a twelve-month gap in focus can quickly create a blurry picture. Let’s take a look at some of these items, what they mean and how you can save yourself and your business from future headaches.

Forms 1099 Forms 1099 are prepared and filed with the Internal Revenue Service on a calendar year basis. They must be distributed to the recipient on or before January 31, 2017 and physically filed with the IRS on or before January 31, 2017. A 1099 form is generally prepared and filed for individuals and unincorporated businesses who received payments for more than $600 in the calendar year, and who are independent contractors or sub-contractors (not employees) for services rendered. Generally, an individual, partnership, corporation or any other business organization involved in an active trade or business must prepare, issue and file Forms 1099 as required. Services rendered are any and all payments to recipients for work performed. The work performed can also apply to work done outside the scope of your business. For example, an engineering firm pays an individual for office cleaning services rendered.

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practice, a 1099 is still required to be prepared, issued and filed with the IRS. In addition, a Form 1099 is required to be prepared for the following types of items: interest, dividends, rents, pension distributions, etc. Amounts paid to law firms (both corporate and non-corporate) must be reported on Form 1099-MISC. It is important to note that the IRS is auditing this area with more intensity, and the potential tax and penalty assessments are significant for non-filing and incomplete or inaccurate filings. It is very important to make sure the Social Security number or federal identification number agrees with the name on the 1099 issued. In some cases, a significant back-up withholding could be assessed on the total amount paid to the independent contractor or subcontractor (1099 recipient), which the employer will be responsible for paying if the 1099’s are not filed or are inaccurate. Additional penalties can be assessed, as well for non-filing and for incomplete or inaccurate 1099’s.

The Affordable Care Act (ACA) may apply to your business if you have 50 or more full time employees and/or full time equivalent employees. As a result, your business may be required to comply with the new Affordable Care Act (ACA) filing requirements by preparing and submitting annual informational reports, which include the following forms: 1094-B, 1094-C, 1095-B and 1095-C. “S” Corporation Shareholders and Health Insurance The Internal Revenue Service has issued a ruling regarding the treatment of health care insurance premiums paid by a Subchapter S corporation for current year coverage on behalf of a two (2) percent or more shareholder-employee, including family coverage, if applicable. Such premiums are deductible by the corporation as an ordinary business expense. Further, the IRS requires that the premiums are includable in the shareholder- employee’s gross inUtility and Transportation Contractor, DECEMBER 2016

come (typically in Box 1 taxable wages on Form W-2) and therefore, must be included in the shareholder’s taxable income. These amounts must be deducted after payroll tax withholdings. The shareholder will be able to deduct these health insurance premiums from gross income on his/her personal income tax return.

Failure to comply with these reporting requirements may result in the reduction or loss of tax benefits.

Taxable Fringe Benefits Publication 15 –B “Employer’s Tax Guide to Fringe Benefits” issued by the Internal Revenue Service identifies twenty specific forms of pay which should be included and reported as part of an employees’ compensation annually. A fringe benefit is a form of pay for the performance of a service. Any fringe benefit you provide is taxable and must be included in the recipient’s pay unless the law specifically excludes it. Examples include educational assistance, group term life insurance coverage, moving expenses, as well as accident and health benefits. Let’s focus on a more popular benefit often extended to key employees and shareholders who are employees of the business as well.

The Internal Revenue Service requires substantiation for auto expense deductions taken on your tax returns. You determine the value of an automobile you provide to an employee by using its annual lease value. For an automobile provided only part of the year, use either its prorated annual lease value or its daily lease value. If the automobile is used by the employee in your business, you generally reduce the lease value by the amount that is excluded from the employee's wages as a working condition benefit. In order to do this, the employee must account to the employer for the business use. This is done by substantiating the usage (mileage, for example), the time and place of the travel, and the business purpose of the travel. Written records made at the time of each business use are the best evidence. Any use of a company-provided vehicle that isn't substantiated as business use is included in income. In

general, the FMV of an employer-provided vehicle is the amount the employee would have to pay a third party to lease the same or similar vehicle on the same or comparable terms in the geographic area where the employee uses the vehicle. A comparable lease term would be the amount of time the vehicle is available for the employee's use, such as a one-year period.

The actual value of fringe benefits provided during a calendar year must be determined by January 31st of the following year.

You must report the actual value on Forms 941 (or Form 944) and W-2. If you choose, you can use a separate Form W-2 for fringe benefits and any other benefit information. Include the value of the fringe benefit in box 1 of Form W-2. Also include it in boxes 3 and 5, if applicable. You may show the total value of the fringe benefits provided in the calendar year or other period in box 14 of Form W-2. However, if you provided your employee with the use of a highway motor vehicle and included 100% of its annual lease value in the employee's income, you must also report it separately in box 14 or provide it in a separate statement to the employee so that the employee can compute the value of any business use of the vehicle.

Create a year-end reporting checklist for these items as part of your best practices. The checklist should identify who is responsible for ensuring the company stays in compliance, due dates of when they need to be completed, who is gathering information at the beginning of the process, and who receives that information at the end of the process. To discuss further, contact Bill McNamara at bmcnamara@curchin.com or call 732-747-0500. The Curchin Group, LLC is committed to providing a broad range of financial services to meet the needs of the construction industry, today, tomorrow and even 30 years down the road. Our clients benefit from the seamless delivery of financial services by a cohesive team of professionals working together.

CONGRATULATIONS TO EVARETT CRUZ AND THE STAFF OF JRCRUZ ON 15 SUCCESSFUL YEARS from SAM LIVINGSTON ISLAND WIDE PHOTO DOCUMENTING YOUR PROGRESS FROM THE START Utility and Transportation Contractor, DECEMBER 2016

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HOW DRONES CAN SAFELY RAISE YOUR FIRM TO NEW HEIGHTS By:James M. Hanrahan, Vice President, Major Account Construction & Development Practice for Conner Strong & Buckelew

If your construction firm isn’t already using unmanned aerial vehicles, a.k.a. drones, you’re probably wondering what all the hype is about.

A number of technological innovations in the last several years have suddenly made these flying machines cheaper and better than ever before. They’re now easy to control, they offer excellent video capabilities, and they do it all for a fraction of what they cost just a few years ago.

It’s no wonder the Federal Aviation Administration expects about 600,000 drones to be flying commercially within a year, up from about 20,000 currently registered.

It’s also no wonder why people can’t stop talking about them in the construction industry. In short, drones can revolutionize the way builders do business.

They’re faster than human surveyors. They can collect data accurately and frequently. They turn that data into topographical maps of worksites, 3D structural models to track construction progress and volumetric measurements to monitor supply stockpiles.

The list goes on. They can monitor job sites to identify safety risks. They can keep investors happy by showing them slick videos of construction progress. They can be programmed to do all this automatically on a consistent basis.

The bottom line is that they allow construction companies to operate more efficiently, to cut costs, to reduce risks and speed up their work. Drones are so clearly a potential boon to this industry that PwC predicts construction to be a major driver of the commercial drone market, which is estimated to exceed $5 billion in the next three years.

Of course, those are all the potential advantages, and they could easily be spoiled if firms aren’t mindful of the potential disadvantages.

DRONE RISK AND REWARD One of the biggest drone-related concerns in the news has been about privacy, as people worry about flying camcorders accidentally or intentionally snooping on them. It’s important to make sure any homeowners around a construction site are comfortable with drone usage, but that’s a relatively minor concern for builders.

The main concerns for builders break down into three main categories: mid-air collisions, loss on control, and regulatory compliance.

A mid-air collision with a manned aircraft is clearly the most catastrophic potential risk, which is why the FAA recently released regulations, which include that drones can’t fly higher than 400 feet and can’t fly at night.

While drones are far more reliable than ever before, loss of control is still a threat. Many drones have fail-safes in case something goes haywire in flight, but that definitely doesn’t mean they’re foolproof.

Then there are the regulations, which are the murkiest risk of all. We thankfully recently received guidance in federal law, but there’s still a hodgepodge of state and local laws.

Of course, drones also have tremendous potential for risk reduction. They can ensure teams are using proper safety measures, and can assess the causes of jobsite accidents to prevent future accidents from occurring.

Ultimately, there’s no doubt that drones can lead to better safety and efficiency if used correctly.

NEW TOOL IN THE TOOLBOX Is anyone using drones in our region? Absolutely, and it will almost certainly grow.

There are already a number of larger firms employing drones in their work in the New Jersey, New York and Pennsylvania areas.

They’re primarily used by general contractors, some vertical contractors, and heavy civil contractors. They’re mostly for checking worksite progress and safety, but they are increasingly popular for home builders as well.

In fact, we’ve worked with a number of contractors that are starting to use drones in a variety of applications.

Mount Group, in Berlin, NJ is one example. President and owner Dave Smith said that they use drones for inventory control and volume calculations of bulk materials at their quarry and recycling operations.

Still, we caution businesses about jumping into drone use without doing due diligence.

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First, we recommend adopting a formal checklist of protocols and best practices for safe operations, which are available from more and more trade organizations. Even though it’s a nascent field, there are already formal ways of safely operating drones.

Just in case something does go wrong, we also point out that drones are excluded from general liability insurance coverage, which means firms need an endorsement on their existing policy or a separate policy. Fortunately, there are more and more insurance carriers offering policies for drones today as well.

Ultimately, you can believe the hype with drones, and there are clear ways that they can safely raise your construction operations to new heights.

About the Author: James Hanrahan is Vice President of the Construction & Development Practice for Conner Strong & Buckelew, where he is responsible for business development and risk management. He has more than 23 years of experience in underwriting and risk management, and works with a variety of builders and contractors in the New Jersey, New York and Pennsylvania markets.

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Labor Relations

COMPLY WITH NEW LABOR REGULATIONS BY DECEMBER 1st OR RISK WAGE CLAIMS THE U.S. DEPARTMENT OF LABOR HAS SIGNIFICANTLY MODIFIED OVERTIME EXEMPTION REQUIREMENTS By: Gregory R. Begg, Esq., Peckar & Abramson All employers need to be aware of the U.S. Department of Labor's new rules which take effect on December 1, 2016 and double the minimum salary threshold to qualify for overtime exemption under the Fair Labor Standards Act. Failure to comply with the new requirements will expose your organization to claims for unpaid overtime, attorneys' fees and liquidated damages by all workers underpaid according to the new rules.

The U.S. Department of Labor expects the new rules to impact more than 4 million workers within the first year of implementation. The rule change has particular relevance to construction project executives who frequently work in excess of 40 hours per week and whose level of pay may not qualify for the overtime exemption under the new requirements.

The Fair Labor Standards Act requires that most employees in the U.S. be paid overtime at the rate of 1.5 times their regular hourly rate for all hours worked over 40 hours in a workweek.

However, some employees are exempt from the overtime requirement if their salary and job duties meet certain requirements.

The Labor Department's new rules will double the minimum salary needed to qualify for the overtime exemptions, from the previous level of $455 a week (or $23,660 a year) to $913 a week (or $47,476 a year), starting on December 1, 2016. The duties test for overtime exemption has not changed and requires analysis of whether the employee's duties are classified as executive, administrative, professional, computer or outside-sales.

Highly compensated employees, who are also exempt from overtime requirements, are also subject to a new salary threshold.

Now, a highly compensated employee must be paid no less than $134,004 annually. The old salary threshold for highly compensated employees was $100,000 annually. The duties test for a highly compensated employee also has not changed and includes showing that the employee performs at least one of the responsibilities of an executive, administrative or professional exempt employee.

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The new salary thresholds will require employers to make adjustments by, for example, disallowing overtime work for these employees, increasing pay to meet the new threshold or paying time-and-half for hours worked beyond 40 hours in a week. For many employers, these new requirements will require them to closely track the hours worked by previously exempt employees.

Employers in the construction industry need to pay special attention to the effect of these new rules, particularly with respect to project superintendents, who may be on the cusp of these new rules. Assessing whether a superintendent is exempt from overtime requires analysis of his or her job description, duties and discretion.

In order for a superintendent to qualify as an “administrative” employee for overtime exemption, the superintendent's primary duty must be performance of office or non-manual work related to the business of the contractor, and the superintendent must be able exercise discretion and independent judgment on matters of significance. A superintendent may qualify as an exempt “executive” employee if his or her primary duty is management and the superintendent regularly directs the work of two or more other employees and has authority to hire or fire other employees.

When a dispute arises as to a superintendent's exempt status, the contractor has the burden of proving the exempt status by clear and affirmative evidence. The courts construe these overtime exemption rules in favor of employees. Courts look at several factors including the superintendent's ability to hire, fire, interpret drawings, execute and make changes to subcontracts and direct and supervise work and employees. A superintendent who is not a highly compensated employee (i.e., has an annual salary of less than $134,004) and performs manual labor along with some additional duties such as keeping time records but has no authority over subcontractors or other workers is likely to be deemed nonexempt and therefore, would have to be paid overtime.

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The guidance on whether project superintendents are exempt provides mixed results. The Labor Department previously issued two Opinion Letters addressing the "executive" and "administrative" exemptions for project superintendents and concluded that superintendents, under the specific facts presented in those cases, were exempt. However, the Labor Department has withdrawn these opinion letters presumably because the Labor Department no longer believes the letters are correct. Court decisions on the subject present a mixed bag of outcomes and are highly fact-specific.

What is clear is that project superintendents are not exempt simply by virtue of titles such as "project executive." The job duties of a project executive or a project superintendent differ from company to company and project to project. Determining whether an employee is exempt is highly fact-specific. Therefore, it is important to consult an attorney to ensure that your company's pay practices comply with current law.

An action to stop the application of the new rules has been filed in the Eastern District of Texas and is currently pending before Judge Amos L. Mazzant III as of the writing of this article. On November 16, 2016, Judge Mazzant held oral arguments on this matter and stated that on November 22, 2016 he would issue a decision on whether to grant a preliminary injunction halting the application of the new salary threshold for overtime exemption. You should consult an attorney on the latest developments to determine what effect this ongoing case may have on your business.

About the Author…. Gregory R. Begg, Esq, Partner in the law firm of Peckar & Abramson, represents employers in all matters concerning labor relations and employment law compliance. Alexander Saunders, Esq, a senior associate at the firm, contributed substantially to this article. For more information, send an email to gbegg@pecklaw.com.

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