The Contractor's Compass August 2018

THE

ASA’s

THE OFFICIAL EDUCATIONAL JOURNAL OF THE AMERICAN SUBCONTRACTORS ASSOCIATION

WWW.ASAONLINE.COM Lean Construction: A Primer for Subcontractors

by Jim Cavaness, MMC Contractors West, Inc.

Employee Training and Development: The Importance, the Employer Neglect and the Cost to the Organization

by Jamie Hasty, SESCO Management Consultants

CASE STUDY: Beware the New Test in California— The ABCs of Independent Contractors

by Roger Mason, Esq., and Rachael E. Brown, Esq., Sweeney, Mason, Wilson & Bosomworth

E-Verify and Construction

by Julie A. Pace and Heidi NunnGilman, The Cavanagh Law Firm

Distracted Driving— Create a Successful Prevention Program

by David Galbraith, MS, CSP, AIM, Amerisure Insurance Company

Legally Speaking: Know the Basics of Mediation, Arbitration and Litigation

by Timothy Woolford, Esq., Woolford Kanfer Law, P.C.

AUGUST 2018

Back to ‘School’

SAVE THE DATE

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

© Sean Pavone

THE

August 2018

EDITORIAL PURPOSE The Contractor’s Compass is the monthly educational journal of the Foundation of the American Subcontractors Association, Inc. (FASA) and part of FASA’s Contractors’ Knowledge Network. The journal is designed to equip construction subcontractors with the ideas, tools and tactics they need to thrive.

Features Lean Construction: A Primer for Subcontractors......................10

by Jim Cavaness, MMC Contractors West, Inc.

The views expressed by contributors to The Contractor’s Compass do not necessarily represent the opinions of FASA or the American Subcontractors Association, Inc. (ASA).

Employee Training and Development: The Importance, ..........12 the Employer Neglect and the Cost to the Organization

by Jamie Hasty, SESCO Management Consultants

EDITORIAL STAFF Editor-in-Chief, Marc Ramsey

CASE STUDY: Beware the New Test in.............................................15 California—The ABCs of Independent Contractors

MISSION FASA was established in 1987 as a 501(c)(3) taxexempt entity to support research, education and public awareness. Through its Contractors’ Knowledge Network, FASA is committed to forging and exploring the critical issues shaping subcontractors and specialty trade contractors in the construction industry. FASA provides subcontractors and specialty trade contractors with the tools, techniques, practices, attitude and confidence they need to thrive and excel in the construction industry.

by Roger Mason, Esq., and Rachael E. Brown, Esq., Sweeney, Mason, Wilson & Bosomworth

E-Verify and Construction......................................................................16

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

Distracted Driving—Create a Successful.......................................20 Prevention Program

FASA BOARD OF DIRECTORS Richard Wanner, President Letitia Haley Barker, Secretary-Treasurer Brian Johnson Robert Abney Anne Bigane Wilson, PE, CPC SUBSCRIPTIONS The Contractor’s Compass is a free monthly publication for ASA members and nonmembers. Subscribe online at www.contractorsknowledgedepot.com.

by David Galbraith, MS, CSP, AIM, Amerisure Insurance Company

Departments

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

ASA PRESIDENT’S LETTER...................................................................... 4 CONTRACTOR COMMUNITY.................................................................. 6

EDITORIAL SUBMISSIONS Contributing authors are encouraged to submit a brief abstract of their article idea before providing a fulllength feature article. Feature articles should be no longer than 1,500 words and comply with The Associated Press style guidelines. Article submissions become the property of ASA and FASA. The editor reserves the right to edit all accepted editorial submissions for length, style, clarity, spelling and punctuation. Send abstracts and submissions for The Contractor’s Compass to communications@ASA-hq.com.

ABOUT ASA ASA is a nonprofit trade association of union and non-union subcontractors and suppliers. Through a nationwide network of local and state ASA associations, members receive information and education on relevant business issues and work together to protect their rights as an integral part of the construction team. For more information about becoming an ASA member, contact ASA at 1004 Duke St., Alexandria, VA 22314-3588, (703) 684-3450, membership@ASA-hq.com, or visit the ASA Web site, www.asaonline.com.

CONSTRUCTION IN THE COURTS......................................................... 8 LEGALLY SPEAKING.................................................................................22 Basics of Mediation, Arbitration and Litigation

by Timothy Woolford, Esq., Woolford Kanfer Law, P.C.

Quick Reference

LAYOUT Angela M Roe angelamroe@gmail.com © 2018 Foundation of the American Subcontractors Association, Inc.

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ASA/FASA CALENDAR.............................................................................24 COMING UP.................................................................................................. 24 C O M P A S S

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ASA PRESIDENT’S LETTER Dear ASA Members, As many of you know, the three pillars of our Association are advocacy, education, and networking.

This edition of The Contractor’s Compass takes us back to “school” to continue our learning about several topics, such as Lean construction, employee training and development, E-Verify, OSHA inspections, and the dangers of distracted driving.

You may not have thought about it before, but we don’t typically call The Contractor’s Compass a magazine. We call it an educational journal. Each month, The Contractor’s Compass provides continued education on topics of most interest to you. ASA staff hand select experts from the construction industry to write feature articles and the Legally Speaking column to give you advice and tips, or simply broaden your knowledge about a particular subject.

The Contractor’s Compass now has its own Web site: http://contractorscompass.org, where reading articles may be easier on the eyes.

The publication is still accessible via

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the ASA Web site, www.asaonline. com, and is still available as a pdf for those who wish to print it out, and as a digital flip-book for those who prefer to read it as a virtual publication.

Another way ASA provides continued education on subcontracting topics and issues is through education webinars. ASA recently announced its 2018-19 Webinar Series. Previously, ASA offered webinars in August through May, but this year we’ll have a webinar each month, from August through August.

Webinars will focus on marijuana use laws and restrictions, electronic takeoff software solutions, group captive insurance, improving communications between GCs and subcontractors, improving the change order process, work-inprogress reporting, the best and worst construction legal decisions of 2018, Lean construction, avoiding predatory wrap-ups, corporate and individual tax planning, human resources basics for small businesses, emerging technologies, and

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the skilled trades shortage.

To register for ASA webinars, click on “Register for an Event” on the ASA Web site, www.asaonline.com.

The third way ASA provides continuing business education is at ASA’s annual convention, SUBExcel.

SUBExcel 2019 will take place March 6-9, 2019, in Nashville, Tenn. ASA staff are already hard at work scheduling top-notch speakers and planning another terrific event. Please save the dates and plan to join us in Nashville. Online registration via www.subexcel.com is expected to be available in September or October.

ASA is committed to providing you with the education opportunities you need to stay ahead of the curve. If you have ideas for future education webinars or workshops, I welcome your suggestions.

Best Regards, Courtney Little 2018-19 ASA President

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CONTRACTOR COMMUNITY DOL Releases Videos Providing Guidance on Wage Laws The U.S. Department of Labor’s Wage and Hour Division has released a series of instructional videos that provide assistance to employers about their responsibilities to comply with the Fair Labor Standards Act. The brief, plain-language videos are intended to help employers who simply want to understand what the law requires. Topics covered include: • Coverage: Does the FLSA apply to my business?

• Minimum Wage: What minimum wage requirements apply to my business?

• Deduction: Can I charge my employees for uniforms or other business expenses?

• Hours Worked: Do I have to pay for that time?

• Overtime: When do I owe overtime compensation, and how do I pay it correctly?

For more information about the FLSA and other wage-related laws, see www.dol.gov/whd.

ASA Calls for Sub Payment Protections on Water Infrastructure ASA, in collaboration with three associations representing the surety industry, called on Congress to provide subcontractor payment assurances on projects financed through the federal Water Infrastructure & Innovation Act. WIFIA is used to provide loans and loan guarantees to finance water infrastructure projects across the country. Under current law, it is not clear whether existing federal policy to require performance and payment bonds on projects financed through federal grants applies to WIFIA-financed projects. ASA supports an amendment to pending water infrastructure legislation that would extend the tenets of the federal Miller Act, the existing law that requires a federal prime construction contractor to provide performance and payment

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bonds, to all projects financed through WIFIA. Without this clarification, construction subcontractors and suppliers on water infrastructure projects will not be assured of payment protections.

The surety associations participating in this important effort are the American Insurance Association, the National Association of Surety Bond Producers, and The Surety & Fidelity Association of America.

OSHA Proposes Further Revisions to Crane Operator Qualification Rule OSHA, on May 21, published a proposed rule intended to provide longterm clarity regarding crane operator certification requirements and to reinstate the employer duty to ensure that a crane operator is qualified to safely operate equipment. Indeed, approximately one-fifth of OSHA’s notice details the responsibility of employers in addition to having their operators certified.

The proposed rule also addresses qualifications for trainers; expands the type of certification programs for crane operators; clarifies the requirements for operators-in-training; clarifies that employers are responsible for paying for certification programs for employees; and clarifies that duty-cycle cranes or cranes in the 5,000 to 35,000 lb. capacity are included. OSHA’s proposed rule also raises the specter of still another extension of implementation of the operator certification compliance date in order to provide OSHA with more time to complete rulemaking; the compliance date currently is Nov. 10, 2018.

ASA Helps Subs Evaluate the Environment Through a Public Policy Lens Since its inception in 1966, ASA has been the principal advocate for the rights of construction subcontractors, specialty trade contractors and suppliers in the public policy arena. An ASA government advocacy tool, The Business Environment for Construction

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Subcontractors Through a Public Policy Lens: An Evaluative Tool, poses a series of questions on nine subcontractor issues. A subcontractor advocate’s responses to these questions will help him/her determine and prioritize their actions in the legislative, regulatory and judicial arenas. The issues addressed include: • Pay-if-paid clauses • Prompt payment on private work • Prompt payment on public work • Retainage on private work • Retainage on public work • Mechanic’s lien rights • Statutory payment bond rights • Subcontractor payment assurances on public-private partnerships • Risk allocation, including indemnity and additional insured ASA has reference materials on each of the above issues, including legislative work kits, 50-state law reviews, fact sheets, white papers and more; these documents are available in the Member Resources section on the ASA Web site.

A subcontractor advocate also may want to consider issues not included in the questionnaire. For example, precontract disclosure of the terms of consolidated insurance policies, antiforum selection requirements, procedures to limit bid shopping on public work, and contractor licensing are all issues of high interest to construction subcontractors. The evaluative tool, which was developed by the ASA Task Force on Government Advocacy, is available under “Contracts and Project Management” in the Member Resources section of the ASA Web site.

ASA Resource Answers Construction Subcontractors’ Questions About Pay-If-Paid “Pay-if-paid” contract clauses can cause big problems for unpaid construction subcontractors and suppliers.

Such clauses specify that a subcontractor or material supplier will not be paid for the work it performed or the

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supplies or services it provided “if” the general contractor doesn’t receive payment from the project owner. Pay-if-paid is not enforceable in all circumstances, however, and ASA’s Contingent Payment Clauses in the 50 States helps subcontractors and suppliers understand their risk.

This resource is of tremendous business value to subcontractors and suppliers, who need to know the risk of pay-if-paid. Pay-if-paid is enforceable in some, but not all states, and the states in which pay-if-paid is enforceable differ as to when a contract clause creates a true ‘condition precedent to payment’ threatening the right of unpaid subcontractors to be paid for satisfactory work.

Contingent Payment Clauses in the 50 States explains for each state: • Whether a “pay-if-paid” clause will be enforced in that state if it is unambiguously drafted.

• Whether the state distinguishes between “pay-if-paid” and “pay-whenpaid” provisions.

• Whether “pay-when-paid” clauses allow a contractor in the state to only delay payment to its subcontractors for a reasonable time.

• Key statutes and cases that describe the state’s position on contingent payment clauses.

ASA general counsel, Kegler, Brown, Hill and Ritter, Columbus, Ohio, prepared the manual. The manual is available to ASA members under “Contracts and Project Management” in the Member Resources section of the ASA Web site by logging in at “LogIn/Access Member Resources.”

payment and pay-if-paid subcontract clauses are among the top concerns of ASA members. All three of these concerns can be traced back to the adequacy of project financing, at least absent predatory behavior by those controlling the cash flow.

ASA’s White Paper on Project Financing is intended to help ASA members understand the importance of the creditworthiness of their potential customers. The white paper addresses industry policies and practices, including a review of relevant clauses in contract documents published by ConsensusDocs and the American Institute of Architects.

The ASA Addendum to Subcontract, which is one of the documents in the ASA Subcontract Documents Suite, includes a provision that clarifies the contractor’s obligation to provide disclosures to the subcontractor as a condition precedent to the subcontractor’s performance. The white paper also provides tips on protecting your business, including arguments to make to the prime contractor and how to get information on project financing. The ASA White Paper on Project Financing is available under “Contracts and Project Management” in the Member Resources section of the ASA Web site.

OSHA Web Site Lists Trainers for 10- and 30-Hour Safety Training

The Occupational Safety and Health Administration’s Web site now lists Agency-authorized trainers who conduct 10- and 30-hour Outreach Training classes in construction, general industry, maritime or disaster site work.

Under the Occupational Safety and Health Act of 1970, employers are ASA White Paper Provides Tips on responsible for providing a safe and Project Financing healthful workplace. Training in the safe way for workers to do their jobs well is Construction project insolvency is a an investment that will pay back over major concern of construction subconand over again in fewer injuries and illtractors who provide a large amount of labor and materials to the prime contrac- nesses, better morale, lower insurance tor on credit. A 2015 ASA survey revealed premiums and more. The 10-hour training program is intended to provide an that slow final payment, slow progress

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entry level construction worker’s general awareness on recognizing and preventing hazards on a construction site.

The 30-hour program provides additional training on specific hazards of the job. OSHA also provides other information on employers’ training requirements and offers free resources including publications, videos and other assistance to help employers to protect employees from injuries and illnesses.

Help ASA Advocate for Subcontractors in the Courts While ASA and its chapters represent subcontractor interests before legislative and executive bodies at all levels of government, all too often the Association finds that the courts interpret the laws and regulations approved by these other government bodies. That means ASA also must muster the financial resources to represent subcontractor interests in the courts on issues like contingent payment, mechanic’s liens, indemnity, insurance coverage, and no damage for delay. Fortunately, ASA can tap its Subcontractors Legal Defense Fund and the Foundation of ASA’s Subcontractors Legal Research Fund to finance its briefs on important court cases. These two funds finance ASA’s advocacy on behalf of subcontractors before courts across the country. Both are funded entirely by voluntary contributions that are earmarked for precedent-setting cases where subcontractor rights are at stake. ASA can’t continue its work in support of subcontractors unless it has the funds to pay for participation in the court cases that matter most to subcontractors. With the help of ASA members, ASA can marshal the financial resources needed to invest in precedent-setting litigation to establish subcontractor rights. You can make your contribution through the ASA online store. For more information, visit the ASA SLDF Web site at www.sldf.net.

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CONSTRUCTION IN THE COURTS ASA Files Amicus Brief in Texas Court Case of Importance for Employers Related to Transportation of Employees to/ from Workplace

by American Subcontractors Association In a “friend-of-the-court” brief filed on July 31, ASA asks the Supreme Court of Texas to reconsider its underlying decision in a case of importance for all employers who pay employees whose normal duties do not include transportation any amount to transport other employees to and from the workplace.

ASA submitted the amicus brief in support of respondent Amerimex’s motion for rehearing in the case of Steven Painter; Tonya Wright, Individually and as Representative of the Estate of Earl A. Wright, III, Deceased; Virginia Weaver, Individually and as Next Friend of A.A.C., a Minor; and Tabitha R. Rosello, Individually and as Representative of the Estate of Albert Carillo, Deceased, (Petitioners) v. Amerimex Drilling I, Ltd., (Respondent).

In the underlying case, Steven Painter, J.C. Burchett, Earl Wright and Albert Carillo were working the night shift for Amerimex Drilling, drilling a well for Sandridge Energy on an oil and gas drilling rig in Pecos County.

The prime contract between Sandridge and Amerimex provided that Amerimex was to perform the drilling and provide the drilling crews. Due to some Sandridge restrictions, the bunkhouse for

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the Amerimex crew was not as close as they normally would have been, located about 30 miles from the remote drilling site. The prime contract provided that the driller for each crew would receive $50 per day for transporting the crew between the bunkhouse and the drilling site.

On July 28, 2007, after the Amerimex crew’s shift ended, Burchett, the driller, was driving the crew back to the bunkhouse and on the trip, he fell asleep and the truck carrying the crew rolled over, ejecting all four members, injuring Painter and Burchett and killing Wright and Carillo.

Burchett received workers’ compensation for his injuries after the Texas Department of Insurance determined that his injuries were covered because, the department concluded, Burchett “was paid to transport his crew to and from the worksite and the company bunkhouse.” The trial court granted Amerimex’s motion for summary judgment, dismissing the claims because “Amerimex is not vicariously liable for the negligence of JC Burchett.” The Eighth Court of Appeals, El Paso, Texas, denied the appeal. However, in an April 13, 2018, opinion, the Texas Supreme Court reversed and remanded the case to the trial court, relying on

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workers’ compensation precedent holding that where an employee transports others to and from the place of employment as either part of the contract of employment or for payment by the employer, the work is within the scope of employment for purposes of the coverage and protections of the workers’ compensation statute.

Citing that case law, the Texas high court reversed and remanded the lower courts for a determination whether Burchett was acting in the course and scope of his employment at the time of the accident.

In the brief, ASA explains that Amerimex is not vicariously liable for the actions of Burchett because even if Burchett was considered to be an employee at the time of the accident, he was outside the course and scope of employment.

“An employer will only be held vicariously liable for the actions of its worker if: (1) the worker was an employee; and (2) was acting in the course and scope of employment. Neither requirement is satisfied in this case. If a worker is determined to be an employee, the question is whether the employee was within the course and scope of his employment.

Even if Burchett was an employee at the time of the accident, he was not within the course and scope

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of his employment when driving crew back to the bunkhouse. This Court has stated ‘vicarious liability arises only if the tortious act falls ‘within the scope of employee’s general authority in furtherance of the employer’s business and for the accomplishment of the object for which the employee was hired.’’

Traveling to and from work, even though arguably for the employer’s benefit, has been consistently held to be outside the course and scope of employment.”

ASA adds that travel reimbursement does not create an exception to the “coming and going” rule. “The contractual $50 per day Driver’s Bonus paid to the driller of each crew was a travel reimbursement,” ASA writes. “Travel reimbursements create no exception to the ‘coming and going’ rule, which states travel to and from a job location is not within the course and scope of employment.

The Driver’s Bonus was to reimburse workers for the costs associated with a remote drill site, similar to the $50 per day Subsistence Bonus that compensated crew for daily expenses and the $50 per day Bottom Hole Bonus available to crew who remained employed from the well’s spud date through its completion.”

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“The lower courts,” ASA continues, “correctly applied the principle from Pilgrim [Pilgrim v. Fortune Drilling Co., Inc., 653 F.2d 982, 987 (5th Cir. 1981)] that an employer compensating travel does not create an exception to the coming and going rule. Similar to Pilgrim, Amerimex exercised no control and had no right of control over Burchett once he completed his shift. The remote location of the drill site does not affect the coming and going rule, and in fact lends support to the argument that Amerimex is simply trying to reimburse crew members for their added personal costs due to the remote well location. The Court made an unnecessary and incorrect distinction between: (i) a contract requiring Amerimex to hire drivers to provide transportation, and Amerimex deciding to offer that extra work to Burchett; and (ii) the actual contract contemplating that Amerimex would assign the driving task to specific individuals, the drillers.”

“While Amerimex had the right to control Burchett regarding his employment as a driller,” ASA writes, “once Burchett’s shift ended and Burchett left the well location, Amerimex no longer exercised control over him. The driving

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‘job’ assigned to Burchett was wholly separate and unrelated to Burchett’s employment as a driller.

It, therefore, must be analyzed separately to determine whether Amerimex exercised sufficient control over Burchett’s actions as a driver to impose vicarious liability on Amerimex. Even if Burchett was required to drive the crew back to the bunkhouse in the evenings, Amerimex exercised no control over Burchett completing this job.

Amerimex had no right of control over the employees after their shift ended. They were not on the payroll and the company did not direct or instruct its employees in any regard as to how they commuted to and from work. Regardless of Plaintiff’s contentions, a travel reimbursement is not being ‘on the payroll’. At most, Burchett was an independent contractor, and an independent contractor’s negligence does not impose liability on an employer for respondeat superior purposes.

Brian K. Carroll, Sanderford & Carroll, P.C., prepared the brief for ASA. ASA’s Subcontractors Legal Defense Fund financed the brief.

Contributions to the SLDF may be made online.

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Feature Lean Construction: A Primer for Subcontractors

by Jim Cavaness, MMC Contractors West, Inc. There are so many different variables and conditions of satisfaction that must be considered by all involved in trying to bring a project to successful fruition. As a specialty contractor, we have a unique perspective on the use of Lean construction processes. This perspective is simply that—a personal and professional perspective. It may not work for everyone and every situation. Lean is constant improvement!

In its simplest form, the Lean construction process is meant to improve how owners, architects, engineers, general contractors, and specialty contractors work together to achieve a successful project with the least amount of waste. While a simple idea in nature, there are many obstacles to

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overcome when it comes to practicing Lean construction. However, when we focus on working together and building the right team, we’ve found that’s the best approach to accomplish goals.

In the traditional way that a project is conceived and brought to completion, there are many areas of apparent wasted time, effort and resources. So let’s review a hypothetical traditional project from a specialty contractor’s point of view, and see individuals and teams would benefit from a project being completed with a process that allows for an on time, under budget, and gives the owner what it originally envisioned. For discussion purposes, various steps have been left out of this review.

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The Current Landscape There are many routes that a project can take, yet, there is a general direction that is followed at the inception of a project.

• The Idea. The owner has something in mind and is ready to make the investment to make it happen. There’s a general idea of budget and timeline and a Performa that makes economic sense. In order to make this idea into a reality, an architect can become involved as one of the first step in the construction process.

• The Drawings. Given the input and budget from the owner, the architect begins designing using the specifications available. The

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goal at this stage is to provide excellent customer service and deliver an exceptional final product. Once the team has created plans that are at some stage of completion, or complete, they are then sent out to be priced by general contractors.

• The Bids. Usually, general contractors will work closely with specialty contractors to outline bids for a project. Once bids have been obtained, they are turned in and all contractors anxiously await to hear if they’ve been awarded the business.

In a perfect world, the next phase includes the owner carefully evaluating all project bids and choosing the right team for the job based on merit, past performance, reputation, and detailed pricing. However, it’s not uncommon for owners to have sticker shock at this point and request design changes from the architect to help them get to a more digestible number.

This step back slows the momentum of a project and also means everyone involved has expended energy on something that will not come to fruition.

A Team Approach A successful Lean project usually starts with a Target Value Design and Conditions of Satisfaction discussion between the owner and the team members it would like to include in the initial informational planning. This helps to eliminate the wasted time in effort of designing and planning a project that doesn’t fit the Performa.

The usual next step is to utilize the Last Planner® System to look at schedule, identify tasks and milestones that need to be implemented into the project for a timely delivery.

A guiding principle of Lean construction is maintaining the flow of a project. When we stop moving forward, we start accumulating waste.

Complementing this, Lean construction is also based on the idea of “pulling” a project rather than “pushing” it. Ideally, the owner receives exactly

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what it has asked for and the construction team has offered solutions that everyone is comfortable with. But we do not live in a perfect world.

Common language and improved communication is one step toward finding the sweet spot in satisfying the needs of everyone involved.

When we use unifying language and Lean processes, we’re able to work together more efficiently. Not only that, but we avoid veering off track and slowing the project.

Creating a cohesive team is the very root at what makes a successful project. Relationships are built on trust and communication and when those two principles are in place, the team functions like a well-oiled machine.

For example, general contractors rely on specialty subcontractors to execute a big portion of the work on a project. It takes a lot of time to continually educate specialty subcontractors on the processes and language they use to ensure they are following their guiding principles. The more specialty subcontractors understand the process, the better their performance will be. Having a solid team of specialty subcontractors gives the general contractor a significant competitive edge.

When the general contractor can spend less time focused on re-educating the specialty subcontractors, more time is dedicated to the project, thus helping ensure it stays on track.

From the specialty subcontractor perspective, this is their opportunity to be of service in the project, and in doing so, make themselves invaluable to the owner and general contractor.

Being part of a good team helps the team become more profitable, which subsequently results in more people wanting them on their team.

Learning the Language The Lean Construction Institute has put together an exhaustive and comprehensive process that teams can use to develop a common language and process. This language and process can be used within their own company or organization to eliminate

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waste from their own processes. This process can be taught from the top down, bottom to the top, or can start in the middle of the owners’ team and work both ways until every team member is on board.

Let’s take a brief look at a few of the Lean terminologies and processes: Target Value Design—In any purchase or investment, it is extremely beneficial to design the project to fit within the available funds or Performa.

Conditions of Satisfaction— What actual and detailed results are to be achieved? The owner obviously gets to sit in the driver’s seat for the project. But it is important to remember that all parties involved have their own conditions of satisfaction that they want to achieve for their participation.

The Last Planner® System— Brings stability to the project by giving attention to the flow while reducing the variation in the hand-off of work between the specialty subcontractors in a continuously improving work situation.

The language can be utilized throughout all touchpoints on a project—business development, estimating, engineering, fabrication, project management, and field operations.

The Lean process keeps companies competitive in the market place and should be engrained in the culture of a company.

It is important to remember that Lean in itself is built on two pillars of thought. Continuous Improvement and Respect for People. The best processes in the world are of no use if there are no people to perform them.

Lean offers the opportunity for the team members to bring their ideas and consequently their ownership to a project increasing the satisfaction of all involved.

Jim Cavaness is the service general manager for MMC Contractors West, Inc., Las Vegas, Nevada. He can be reached at (702) 889-6800 or jcavaness@mmccontractors.com.

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Feature Employee Training and Development: The Importance, the Employer Neglect and the Cost to the Organization

by Jamie Hasty, SESCO Management Consultants

When considering all the aspects of neglected management, most often organizations identify development planning as an area of important need. Development planning truly aids your employees in shaping not only the future of their careers, but also the future of the organization.

For a variety of reasons, the valuable activity of employee training and development often goes ignored or becomes an afterthought by management. With this comes the ultimate price: the loss of top talent or future hopefuls.

We often hear from management that not enough time was spent on the development of direct reports or others in a managerial role. In retrospect, management regrets the lack of engagement in the training in development piece, as well as

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consistency and thoroughness via mentorship and/or coaching. Further identified is the benefit that upper management gains from mentorship and professional growth from others in middle level managerial positions.

These general observations and notations were also confirmed in a Harvard Business Review. The Review identified a study based on analysis of international databases of over 1,200 high achievers and concluded that many of the high-performing employees are not receiving the career development support they desire. The study stated: “Dissatisfaction with some employee-development efforts appears to fuel many early exits.

We asked young managers what their employers do to help them grow in their jobs and what they’d

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like their employers to do, and found some large gaps. Workers reported that companies generally satisfy their needs for on-the-job development and that they value these opportunities, which include high-visibility positions and significant increases in responsibility. But they’re not getting much in the way of formal development, such as training, mentoring and coaching—things they also value highly.

Why is employee training and development a chronic problem in many organizations and why should it not be? Based on SESCO’s 72year human resource experience, the following reasons explain why training and development planning goes often ignored and how that can be a costly mistake for an employer of any size.

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Why is training and development planning put on the back burner?

1. Organizations and management tend to focus most on the present.

Organizations or management often serve in frenetic state of change, realignment of goals/ priorities and trying to do more with less. In this environment, management naturally tends to focus on the essential day-to-day operations and less interest in longer-term activities perceived as having less return on investment such as training and development.

2. The training and development exercises are done but rarely acted upon. We often see many corporate management individuals spend a significant amount of time trying to label certain employees or place them into nondescript or confusing matrices. For example, XYZ organization creates a training matrix with labels such as Super Shining Star, Diamond In The Rough, Underdog, so on and so forth. The challenge with such matrices is that often management is merely concerned with completing the exercise that employees can be misplaced or left out of the mix because they simply do not fit within the overly convoluted label or box. There is most certain a benefit in utilizing a training and development matrix, so long as it is usable and understandable to all involved in the process. Management should accurately identify the categories and label appropriately, explaining why and how the individual has been placed. Further, the matrix should then be integrated into the human resource training and development program which should allow for measurable growth and development of the employee.

3. Management simply states there is no time for training and development. This is and will continue to be the worst excuse of all. There will always be time for important activities for growth and development if that time is

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prioritized by management. As a valuable function of management, carve out the time and integrate the training and development opportunities into daily function.

Keep in mind that training and development should be done incrementally to allow for on the job application of the new skill sets.

Why does training and development planning makes good business sense?

1. Employees, particularly those of the millennial generation, want to see management take a genuine interest in their future and career. It is important to note the emphasis “genuine.” Training and development planning should involve a manager taking a personal interest in the actual employee needs or career path both inside and outside the organization. The program should never been simply a human resource-driven mandate but a collaborative effort between the manager and human resources to create proper growth and development of employees.

2. A solid training and development program builds loyalty and commitment, not only to the organization, but also to the manager. In turn, that same loyalty and commitment increases productivity and employee engagement/satisfaction. Referring back to the point noted above, taking a genuine interest in the employee builds loyalty. Loyal employees are more engaged.

Engaged employees are more productive.

3. Engaged and talented employees naturally aspire to advance within the organization and appreciate meaningful support in the process.

As the Harvard Business Review study showed, capable and ambitious employees strongly desire training, mentoring and coaching. They want to gain valuable career skills sets to further move up in the organization.

They look to become more versatile and valuable to an organization, which aids in retention rates and return on investment. Years ago the

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emerging trend for organizations was to assist employees with their education with tuition reimbursement or assistance. We regularly see where this type of investment in the employee’s education (or skill set) provides valuable support, as well as fosters that loyalty and commitment. On the contrary, if there is no incentive provided by management or the organization for employee education or training and development, employees will go elsewhere to find such resources.

In summary, training and development planning doesn’t have to be elaborate or costly. At the core of every program is good management taking the person-toperson time to understand employee needs and desires, recognizing skills and training needs and collaborating with the employee and human resources to fill any existing gaps. If training and development is executed well, the payoff for the organization can be substantial in terms of longterm loyalty, retention, engagement and productivity. If there is a training and development void, organizations substantially risk valuable employee assets and long-term talent.

Jamie Hasty is vice president of SESCO Management Consultants.

Under an arrangement with ASA, SESCO provides results-oriented human resource consulting services to ASA members. SESCO provides a special “retainer” relationship that provides a free “hotline” to ASA members to discuss day-today employment issues such as policy development, employee challenges such as disciplinary actions, terminations, or workers’ compensation issues, compliance to federal and state employment regulations, and many other management and human resource matters. Hasty can be reached at (423) 764-4127 or jamie@sescomgt.com.

SESCO offers a variety of online and classroom training for employees and managers, customized to meet your organization need and budget.

Contact a SESCO consultant to explore training and development opportunities for your organization.

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Feature CASE STUDY: Beware the New Test in California— The ABCs of Independent Contractors

by Roger Mason, Esq., and Rachael E. Brown, Esq., Sweeney, Mason, Wilson & Bosomworth On April 30, 2018, the California Supreme Court issued a seminal decision in Dynamex Operations West, Inc. v. Superior Court adopting a new legal standard for determining whether a worker is an employee or an independent contractor. In addition to changing the definition of who is considered an employee, this decision clearly imposes an affirmative burden on the hiring entity to prove that independent contractors are properly classified as such.

Under the Court’s new “ABC” test, a worker is presumptively considered an employee under the California Wage Orders unless the putative employer can establish each of the following three elements: A. The worker is free from the direction and control of the hirer in connection with the performance of the work, both under the contract for the work and in fact; B. The worker performs work that is outside the usual course of the hiring entity’s business; and C. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Prong A is akin to the common law standard which examines whether the hiring entity has the right to control the manner and means of accomplishing the work at issue. This element requires the company to prove that the worker is free of the control a company typically exercises over its employees.

The most radical prong is Prong B— that the work performed is different

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and distinct than the company’s usual business. The court uses the example of a retail store that hires a plumber to repair a leak or an electrician to install a new electrical line. Such services are not part of the store’s usual business and as a result, the store would be able to demonstrate independent contractor status. By contrast, a clothing manufacturer that hires a work-at-home seamstress, or a bakery that hires a cake decorator, would typically not be able to make such a demonstration, since the work is part of the company’s usual business operations and accordingly, the worker’s role is more akin to that of an employee than that of an independent contractor.

Prong C seeks to identify workers who have created their own business independent from the business of the putative employer. This can be established by things such as the worker’s “incorporation, licensure, advertisements, [or] routine offerings to provide the services of the independent business to the public or to a number of potential customers.” If a worker has independently made the decision to go into business for themselves, they will likely satisfy this third prong. If, on the other hand, they are “simply designated as an independent contractor by unilateral action of a hiring entity,” there is significant risk the worker will be deemed an employee.

Misclassification of employees as independent contractors can result in significant liability for companies. Labor Code section 226.8 provides for penalties as high as $25,000 per violation. In addition, payroll tax,

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workers’ compensation premiums, overtime, and unemployment benefits are implicated. Prior to Dynamex, determining whether or not a worker was properly classified as independent contractor was particularly challenging, as a myriad of factors were examined, each afforded varying weight depending on the applicable analytical framework being used to evaluate the classification. Companies should immediately conduct a thorough evaluation of all workers currently classified as independent contractors to determine whether they are properly classified under the new legal standard.

You MUST be aware of this new law and its potential consequences on classification. If you have any specific questions or would like more details, please do not hesitate to call our office and one of our experienced employment law attorneys will be happy to assist you.

Roger M. Mason is a shareholder with Sweeney, Mason, Wilson & Bosomworth, Los Gatos, Calif. Since 1982, Mason has focused on labor and employment law, both transactional and litigation. He has successfully represented businesses in multiple aspects of employment and labor law issues through negotiations, strikes. pickets, disputes, mediations, arbitrations and trials. He can be reached at (408) 356-3000 or rmason@smwb.com. Rachael Brown assists her clients in a variety of litigation matters, focusing primarily on employment disputes. She can be reached at (408) 356-3000 or REB@ smwb.com.

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Feature

E-Verify and Construction

by Julie A. Pace and Heidi Nunn-Gilman, The Cavanagh Law Firm Since November 1986, the Immigration Reform and Control Act has required that employers verify the identity and employment eligibility for all newly hired employees using the Form I-9. In construction, most companies completed the I-9 in paper form. Even with a fully complete I-9, many undocumented workers were able to obtain employment using false identities. To address this issue, the federal government launched E-Verify.

What Is E-Verify?

E-Verify is an internet-based program administered by the Social Security Administration and the Department of Homeland Security.

Employers who are enrolled in E-Verify enter information from the employee’s Form I-9 into the E-Verify system. This information is then compared to information in the SSA and DHS records to verify identity and authorization to work in the United States.

If the information entered from the employee’s Form I-9 does not match the SSA and DHS records, then E-Verify provides a tentative non-confirmation. The employee can challenge the TNC and work with the

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SSA or DHS to correct the error in their records. If the employee does not challenge the TNC or is unable to resolve the discrepancy that caused the TNC, then E-Verify generates a final non-confirmation, informing the employer that the individual is not authorized to work in the United States.

E-Verify provides employers with a method that they can use, in addition to the Form I-9, to verify an individual’s identity and authorization to work in the United States and provide assurances of compliance.

Unfortunately, however, no system is perfect and even the Government’s own reports show that a limited number of individuals can pass E-Verify using false documents. This occurs because people sometimes use documents to work that belong to a real person so that they can pass E-Verify.

This situation has resulted in an increase in identity theft for purposes of gaining employment.

Who Is Required to Use E-VerifY? E-Verify is currently voluntary at the federal level, except for companies with federal contracts, who are

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required to use E-Verify. Additionally, there has been various legislation introduced in Congress that would make E-Verify mandatory nationwide.

President Trump also included mandatory E-Verify in his 2019 budget proposal. Therefore, nationwide mandatory E-Verify is closer than ever.

Some states require all employers to use E-Verify, while others require public entities or companies who contract with the state public entities to use E-Verify. Companies should review the state laws in all states in which they operate to ensure that they are in compliance with any state E-Verify requirements.

Employers in states that do not require E-Verify have the option of whether to use E-Verify.

How Does an Employer Use E-Verify?

Employers Must Enroll in E-Verify Online & Agree to an MOU. A company desiring to use E-Verify has to enroll and complete a Memorandum of Understanding online at https:// www.e-verify.gov/e-verify-enrollment. In the MOU, employers agree

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to follow the program requirements, including: 1. The employer may not submit an inquiry to E-Verify until after an employee is hired and an I-9 has been completed and only for new employees, not for employees hired before the employer enrolled.

2. The employer must not discriminate against employees based on national origin or citizenship status.

3. The employer must post notices provided by DHS regarding its participation in E-Verify and must post anti-discrimination notices issued by the DOJ. 4. The employer may not use E-Verify selectively. If used, it must be used for all new hires at the location using E-Verify.

5. The employer may not use E-Verify to reverify the employment eligibility of an employee whose original work authorization documents have expired.

6. The employer must provide the employee copies of the written Further Action Notice, if applicable, and the opportunity to resolve the TNC. 7. The employer must not take adverse action against an employee while the employee is challenging a TNC, unless the employer obtains knowledge (as defined in 8 C.F.R. § 274a.1(1)) that the employee is not authorized to work in the United States.

8. The employer must take steps to safeguard the information used for E-Verify and ensure it is not used for any purpose other than employment eligibility verification.

Companies may register to use E-Verify at individual work sites and not use it at the entire company. The central office can perform the employment verification for all sites or each

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site can perform its own E-Verify process.

Additionally, an employer can outsource employment authorization verification to a third party service provider called an E-Verify Employer Agent. However, if a company outsources its employment verification under E-Verify, it will still be required to sign a Memorandum of Understanding and be assigned a unique number that the service provider will use only for that company.

Employers Enter the Information from the Form I-9 and E-Verify Compares it to the SSA and DHS Records Employers start the employment verification process in essentially the same way that they would if not using E-Verify; by completing a Form I-9. The I-9 cannot be completed until after a company hires an individual.

E-Verify places one limitation on the I-9. The E-Verify employer may accept a List B document to establish identity only if the List B document contains a picture. However, the employee still gets to choose whether to produce either (1) one List A document or (2) one List B and one List C document, and which document from the list to show, as long as the List B document has a photograph. If the employee presents a Permanent Resident Alien Card, a Form I-766 Employment Authorization Document, a U.S. passport or a U.S. passport card, the MOU requires the employer to copy and maintain a copy of the document to verify the photo against the DHS database.

The SSA first verifies if the name, date of birth, social security number, and citizenship status reported match the SSA’s records. Inquiries regarding non-citizens are routed to the DHS/ USCIS to verify the work authorization of the employee. If the information entered matches the SSA and USCIS databases, then no further action is

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required. The employer is provided an “employment-authorized” confirmation and must retain a record of the confirmation with the Form I-9.

If the SSA or USCIS is unable to verify the information, the employer will receive either an SSA TNC or DHS Tentative TNC. The employer must provide the employee with a written notice entitled “Further Action Notice.” The FAN notifies employees that a tentative non-confirmation has occurred and gives them the option to contest it with DHS or SSA and explains the steps the employee must take to resolve the tentative non-confirmation. The employer must print the notice to review with the employee. Both the employee and the employer must sign the FAN. One signed copy of the notice should be given to the employee and one kept with the individual’s Form I-9.

If the employee is challenging the non-confirmation, the employer is required to select “refer case” and print a second notice called a “Referral Date Confirmation” that contains the date on which the referral is made and the date by which the employee must address the tentative non-confirmation. The employer should keep and provide a copy of the Referral Date Confirmation to the employee and keep one for its files, attached to the employee’s Form I-9. If the employee does not challenge the TNC, then the employer can close terminate the individual’s employment and close the case.

Employees Have Eight Working Days and Government Has 10 Working Days to Resolve Discrepancy The employee has eight working days after receiving the referral letter from the employer to contact the SSA or DHS to try to resolve the discrepancy. The employee is to keep working during this time. The employer

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New On-demand Video from FASA When it comes to managing your business, the Foundation of ASA is your partner in education. View and listen to FASA’s on-demand videos at an individual workstation or in a conference room for group training.

Your order includes access to the on‑demand video any time, and as many times as you’d like! This is just one of the on‑demand videos available through the FASA Contractors’ Knowledge Depot to meet your business management training needs.

“Lien & Bond Claims” (Item # 8122) Prudent construction subcontractors take advantage of every tool available to them to protect their payment rights. These tools include payment bonds and mechanic’s liens. Bond and lien claims can be powerful weapons, but payment bonds, mechanics’s liens and the laws regarding them can be complex and tricky, and each state’s law is different. One simple misstep can deprive a subcontractor of its lien and/or bond rights.

In this video-on-demand, Timothy J. Woolford, Esq., Woolford Kanfer Law P.C., explains the basics, including what to do, when to do it and what to avoid in order to preserve these potent and valuable weapons to enforce your sacred payment rights. $65 ASA members | $95 nonmembers This and other on-demand videos are available through FASA’s Contractors’ Knowledge Depot.

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ORDER ONLINE AT www.contractorsknowledgedepot.com

2018 ASA BEST PRACTICES AWARDS ASA offers national recognition to prime contractors that are committed to superior business practices like prompt payment.

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

Helpful Links: • Watch the National Construction Best Practices Awards video.

• Prime contractors: Download the 2018 National Construction Best Practices Award application form.

• Specialty trade contractors: Download the 2018 National Construction Best Practices Award “Form for Evaluating the Applicant’s Business Practices.

Learn more about this award from asaonline.com.

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A U G U S T 2DEADLINE: 0 1 8 APPLICATION NOVEMBER 2, 2018T

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must treat this employee the same as it treats employees who received an automatic work authorization and cannot delay the employee’s start date or training opportunities based on a TNC. The SSA or DHS has 10 working days to resolve the case after the employer has referred the case. If more time is needed, the employer will receive a “case continuance” notice. The entire procedure is designed to provide a final confirmation or final non-confirmation within 10 business days after the employer enters the information in E-Verify, but this does not always occur. After DHS or SSA finishes it review, it updates the results in E-Verify to be either “employment authorized” or “final nonconfirmation.”

If an employee does not challenge a TNC, the nonconfirmation becomes final.

After a non-confirmation becomes final, the employer must either terminate the individual’s employment or notify DHS if it continues to employ an employee after receiving a final non-confirmation. An employer is subject to fines of up to $1,500 for each failure to notify the DHS that it continued to employ an individual after a final non-confirmation. If the employer continues to employ an individual after a final non-confirmation, the employer is subject to a rebuttable presumption that it has knowingly employed an unauthorized alien.

What About Selectively Using E-Verify or Taking Adverse Action During a TNC? Violations of the MOU may lead to legal liability under federal or state law, including Title VII of the Civil Rights Act of 1964 and the non-discrimination provision of the Immigration and Nationality Act. The Department of Justice Civil Rights Division Immigrant and Employee Rights Section enforces the non-discrimination provisions. Employees

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who believe that a company has used E-Verify in a discriminatory manner may file a complaint with the IER. An employer could be subject to a discrimination charge if it uses E-Verify as a pre-screening tool to verify work authorization of applicants.

It could also be subject to a discrimination charge for failing to provide the employee the notice of TNC and right to challenge the TNC, selectively using E-Verify, using E-Verify to verify work authorization of existing employees or taking adverse action based on a TNC. The IER has published an “E-Verify Employer Do’s and Don’t’s,” available at https:// www.justice.gov/sites/default/files/ crt/legacy/2014/03/14/e-verifydosanddonts3.pdf.

An employer is prohibited from taking adverse employment action against an employee who is contesting a TNC. The employee should continue to work until receiving a final result in E-Verify. The employer cannot treat the employee who is contesting a TNC any differently than the employee who gets an initial employment authorized result. If the employee is not challenging the nonconfirmation, the employer should terminate the individual’s employment or report to DHS it is not terminating the individual’s employment after the non-confirmation.

An employee cannot face any adverse employment consequences based on a TNC. An employer may not delay the employee’s start date, delay training, or otherwise treat an employee with a TNC differently than an employee that received an instant confirmation. An employer cannot speed up an agreed-upon start date based on a confirmation from E-Verify, because this would be disparate treatment of employees based on results from E-Verify. If the employer generally offers training to employees in the first ten days of employment, it must provide the same training to the employee with the TNC. An employer may not discriminate against an employee with a TNC.

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

similar state agencies. She can be reached at (602) 322-4046 or jpace@ cavanaghlaw.com. Heidi Nunn-Gilman is a Senior Member in the Employment, Labor, OSHA, and Immigration Department with The Cavanagh Law Firm, Phoenix, Ariz. Nunn-Gilman’s practice focuses on human resource counseling and employment litigation.

She has extensive experience handling employment immigration compliance strategies, including I-9s, E-verify, ICE and worksite investigations and enforcement under the Legal Arizona Workers Act and similar state and local laws.

She regularly advises clients on matters relating to labor and employment law, federal contractor compliance (including Affirmative Action, Davis-Bacon, and federal contractor E-Verify requirements), ADA, Title VII, FLSA, NLRB, FMLA, leaves, drug and alcohol, union matters, wrongful discharge, wage and hour laws for both public and private employers, employee handbooks, confidentiality and non-compete agreements, and executive agreements. She can be reached at (602) 322-4080 or hnunngilman@cavanaghlaw.com.

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Feature Distracted Driving—Create a Successful Prevention Program Fleet managers and business owners have the responsibility to reverse current trends

by David Galbraith, MS, CSP, AIM, Amerisure Insurance Company As summer comes to a close, not only does the weather change, the roads do, too. Schools open their doors for another year of learning. This means more children are walking on or near streets, waiting at bus stops and exiting vehicles in heavy traffic areas. Many young adults are driving for the first time—and traffic volumes increase in residential and commercial areas—as parents drive children to school, college students commute to universities and after-school activities increase.

The increased activity level of many communities—combined with the national distracted driving epidemic— create an environment prone to accidents. In fact, more children are hit by cars near schools than any other location, according to the National Center for Safe Routes to School. The same organization also discovered that 33 percent of youth pedestrian crashes are caused by children darting out into the road.

Just like individuals, fleet drivers are at a greater risk for a distracted driving accident during the back-to-school season. Taking steps to track and enforce driver safety can effectively reduce distracted driving accidents during this crucial time.

What Is Distracted Driving?

Many people view distracted driving as a cellphone or handheld device problem. While the issue has grown exponentially since the advent of the cellphone, distracted driving existed prior to this innovation.

There are three main components that contribute to distracted driving: 1. Visual distractions—any activity that causes the driver to take his or her eyes off the road. This can be reading a map, dialing a phone number, texting, looking in the glovebox, reading a billboard, etc.

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2. Manual distractions—any activity that causes the driver to remove his or her hands from the steering wheel. This type of distraction can include eating, drinking, reading, grooming, adjusting the radio, etc.

3. Cognitive distractions—any activity that causes the driver to lose focus. The driver may be thinking about his or her work, stress, family issues or simply daydreaming.

Often, distracted driving does not take one form—it can include any combination of the above. For instance, talking with a passenger can be visual (the driver turns his or her head) and cognitive (the driver is focused on the conversation instead of the road).

An Alarming Problem The most recent distracted driving statistics paint a bleak picture of an increasing concern for American drivers. Today, drivers are six times more likely to be involved in a distracted driving crash than a drunk driving accident.

Even more alarming, distracted driving is the leading cause of workplace death. Twenty percent of commercial fleet vehicles are involved in a crash annually. Of these crashes, one-fourth involves the use of cellphones.

On-the-job crashes create a myriad of problems for those involved.

The efficiency of the workforce is compromised when vehicles need to be repaired. Moreover, employees who are injured in a crash may require recovery time, which decreases the size of the team and threatens the completion of projects according to schedule. The average cost for an on-the-job crash is staggering: Property damage only—$6,000 Non-fatal injury—$65,000 Fatality—$670,000

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A Responsibility to Change As distracted driving exposures and losses continue to increase, fleet managers and business owners have a responsibility to reverse recent distracted driving trends. The reversal is critical to the safety of employees, the general public and the financial stability of the commercial automobile market. Most commercial fleet managers have felt the financial impact associated with the rising cost of insurance, vehicle repairs, loss of use, liability expenses and worker injuries.

The most effective way to combat distracted driving is to change the behavior of commercial drivers. Targeted behavioral change programs must include all employees who operate company vehicles and/or personal vehicles that are being operated for business purposes.

Improving Driver Selection Driver selection is critical to place safe drivers on the road. Implementing an effective motor vehicle record check program helps ensure that drivers with safe histories are hired, and those with poor records are avoided. MVRs that indicate prior rear-end accidents, regular speeding, reckless driving and/or other distracted driving violations are indicators of future performance.

In addition to MVR checks, online safety behavior assessments can be used to identify the characteristics of a potential driver. The assessments take only minutes to complete and are easy to download or print. Results are immediately available and can be displayed in multiple languages. The assessments measure a potential driver’s critical behaviors that impact safe driving tendencies.

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Some insights include:

• How easily is the driver distracted?

• How responsible or reckless is the driver?

• How trainable is the driver?

• How irritated will the driver become in adverse conditions?

• How aggressive is the driver?

• How compliant is the driver with

laws and directions?

Combined use of MVR checks and online behavioral assessments can significantly improve the quality of the drivers organizations choose to place on the road.

Developing a Distracted Driver Policy The second component necessary to effectively reduce distracted driving is a formal distracted driving policy. The policy should contain several critical elements that stress the importance of the program. When creating a distracted driving policy, the author should evaluate his or her authority, accountability and responsibility. An individual that is responsible and accountable must be in charge of the distracted driving program. The individual also must have the authority to implement change and enforce the disciplinary aspects of program violation.

Helpful items to consider when creating a distracted driving policy include: • Policy communication plan— the policy must be distributed, discussed, reinforced and signed by all employees. The policy must apply to all employees who operate company owned vehicles and/ or personal vehicles for business purposes.

• Definition of distracted driving—a description of visual, manual and cognitive distractions. The list will not be all inclusive, but will provide guidance for drivers.

• Cellphone release policy—a signed policy form that gives the employer permission to obtain an employee’s cellphone records if he or she is involved in an accident while

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operating a company vehicle, or using a personal vehicle for business purposes. Records just prior to an accident can shed light on driver activities leading up to the crash.

The cellphone release policy also indicates to employees that the policy is important and will be enforced.

• Inclusivity of all handheld devices— employees should be made aware that the policy covers the use of all handheld devices (personal and business) while operating a vehicle for business purposes.

• Inclusivity of all vehicles—the policy must apply to all vehicles operated for business purposes. This includes personal, company owned, rental and lease vehicles.

• Disciplinary actions—specific progressive disciplinary policies and procedures must be in writing and clearly communicated to all employees. Violations must be fairly and consistently enforced with all employees.

Consistent Monitoring The success of a distracted driving prevention program is dependent on changing the behavior of drivers.

Several tools can be implemented to monitor driving behavior: • Accident investigations—a proper investigation will identify the root causes of an accident and be used to determine if distraction was a contributing factor.

• Telematics—a widely accepted method of electronic vehicle monitoring, in response to driver behaviors. Telematics can identify hard braking, lane wandering and speeding, among many other vehicle responses. These behaviors are typical of distracted driving.

Telematics dashboards enable fleet managers to monitor driver performance in real-time.

• Cell monitoring/blocking—there are numerous, easily downloadable apps that can block/monitor cellphone use while a vehicle is in

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operation. The app warns the driver when he or she attempts to access a handheld device and in many instances, may block access. Each attempt to use the device is logged and reported in a dashboard.

• Dash cams—small devices that can be used to monitor and record a driver’s behavior. Dash cam recordings can be used to monitor behavior over a designated period of time, document behavior leading up to an accident or to coach drivers when behavior needs to be altered.

Leading the Way for Safe Driving The negative societal impacts of distracted driving are widespread.

Distracted driving accidents affect individuals, families, businesses and communities. It is not acceptable for commercial businesses to contribute to hazardous roadways—there are too many affordable and effective tools available. Those who refuse to accept the status quo, and actively track and enforce driver safety, experience favorable results. Construction groups that participate in telematics programs generally see a reduction in speed and distracted driving related accidents.

Insurance carriers often partner with emerging technology groups to offer services at a discounted cost. Working with their respective insurance carrier or agent, fleet managers can properly educate and monitor drivers—without breaking the bank. As more organizations proactively prevent distracted driving, the commercial sector can lead the charge for safer, distraction-free driving.

David P. Galbraith is the assistant vice president and risk management technical lead for Amerisure Mutual Insurance Company. He is responsible for the identification, research, development and implementation of risk management technology programs, and associated vendor management. He can be reached at (248) 426-7914.

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Legally Speaking

Know the Basics of Mediation, Arbitration and Litigation

by Timothy Woolford, Esq., Woolford Kanfer Law, P.C.

Dispute resolution provisions in subcontracts should not be overlooked.

They are every bit as important as the payment terms, change order procedures and schedule provisions. All subcontractors must understand the important differences between the most common forms of dispute resolution— mediation, arbitration and litigation. If you sign a subcontract containing onerous dispute resolution provisions or procedures, it can be extremely difficult and expensive to enforce your rights.

Arbitration and litigation are both binding forms of dispute resolution.

Decisions constitute final and enforceable rulings on the disputed issues.

Mediation, on the other hand, is non‑binding and is essentially a formalized settlement meeting.

Mediation Mediation involves a third-party (the mediator) who acts as a facilitator between the parties. The mediator does not decide which side’s position is correct. The mediator does not make a ruling or render a decision. The mediator’s job is to evaluate each party’s position, to point out the strengths and weaknesses in each party’s position and to try to get the parties to a negotiated resolution or settlement agreement.

There are no witnesses who give testimony at a mediation and no exhibits

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introduced. It is not a hearing. However, a party to a mediation is encouraged to back up its arguments with project records and other evidence. This is usually presented in a mediation statement submitted to the mediator before the mediation conference. It can also be presented at the mediation conference.

The point is to try and demonstrate that your position has merit so that your opponent believes it is best to settle out of court. Since mediation is an attempt to reach a settlement, nothing said during the mediation is admissible in court.

Mediation is not binding. Either party can walk away from the mediation process at any time. Mediations are often administered by the American Arbitration Association. Such mediations are usually held 60 to 90 days after the demand is filed, although it can vary depending on the complexity of the issues, the number of parties to the mediation and the schedules of the participants and the mediator.

Many subcontracts state that mediation is a condition precedent to the next step of the dispute resolution process.

This means that the parties must try to resolve the dispute through mediation before moving on to the next step in the dispute resolution process, usually litigation in court or arbitration. If the subcontract requires you to mediate before you can get to court or to

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arbitration, you may want to invoke mediation sooner rather than later since it will take at least 60 to 90 days (and perhaps longer) to complete the mediation process. Mediation can be expensive because the mediator has to be paid (usually in advance) and you are well-advised to invest in an experienced construction attorney to assist you the mediation statement and selecting the backup to support your positions. If the mediation does not result in settlement of the dispute, you will have invested a lot of time and money only to come away disappointed.

However, even an unsuccessful mediation enables you to learn a great deal about your opponent’s position and the backup to support it. It is important to select a mediator that is experienced in construction and who has a solid track record of successfully bringing parties together. Without a good mediator who is willing to immerse himself or herself into the details of the disputed issues, the chances of reaching a settlement are diminished. Successful mediations often involve significant concessions or compromise by all parties.

Arbitration Arbitration is an alternative to court in which the parties appoint a third party to decide their dispute. The arbitrator’s ruling is binding and enforceable

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by courts. Unlike a mediator, the arbitrator hears actual testimony from witnesses (which can include experts) and reviews exhibits. The arbitrator analyzes and weighs the impact of the evidence submitted and makes a binding ruling at the conclusion of the arbitration hearing. It is similar to presenting a case in court, but less formal. Arbitrators are not bound by the strict rules of evidence in the same way that judges in court are. There are very few grounds upon which to appeal an arbitrator’s ruling, so if a party believes the arbitrator made a mistake in his or her reasoning or ruling, or did not follow the law, it is almost impossible to overturn the ruling. Arbitrators often decide the case based on what they believe is fair and are not as constrained by legal precedents as are judges.

Some companies prefer arbitration of disputes because arbitration is less formal, usually moves much faster than a lawsuit in court and can be less expensive. An arbitration hearing is often conducted much more quickly than a trial in court. Getting a case to trial in court can take years. Arbitration, on the other hand, is usually completed in a matter of months (although it can vary depending on complexity, schedules and the amount of pre-hearing discovery permitted by the arbitrator). Because arbitration moves quickly, it can provide leverage to subcontractors pursuing payment from the general contractor.

The customer cannot hide behind the sometimes cumbersome procedures inherent in the court system which often delay the trial and drive up legal expenses.

In this author’s experience, arbitration is almost always cheaper because it is less formal, expensive discovery processes are limited, and there is less paperwork that the lawyers have to prepare and file. In recent years, however, some participants have complained that arbitration hearings drag on as the arbitrator(s) sometimes bend over backwards to let each side present all evidence without limitation (which often

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results in duplication of evidence and unnecessary redundancy). Another knock on arbitration is that it can be expensive as the arbitrator is usually an experienced (but expensive) lawyer, architect or engineer, whose hourly fees, travel costs, etc., must be paid by the parties in advance. Exceptionally complex arbitration cases may even require multiple arbitrators. On the plus side, though, experienced arbitrators usually understand the complex construction issues that are at the center of most disputes. To many judges in the court system, the issues in complex construction disputes are completely foreign to them.

Litigation Many subcontracts require all disputes to be resolved by litigation in court, rather than by arbitration.

Litigation has been criticized because it can be expensive and lawsuits can drag on for years. Litigation often entails expensive pre-trial discovery, such as production of documents by the parties, subpoenas to third parties and depositions. Many subcontracts require litigation because the customer believes that it will be more costly and time-consuming for the subcontractor to pursue its claim. Many believe the subcontractor will eventually become frustrated with the time and expense of litigating a dispute through the slow-moving court system. Eventually, some subcontractors will either give up or settle the claim for pennies on the dollar.

Also, judges and juries often have little or no expertise with complex construction issues. Few understand scheduling, scope issues, RFIs, shop drawings, payment applications, plans and specifications and other construction concepts that are often involved in construction disputes. On the other hand, if your position is not unduly complicated and will appeal to ordinary people (such as where you are not paid without any apparent justification), a jury of your peers may be more likely to award you

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a full recovery, plus attorney fees, interest and penalties (if permitted in your jurisdiction).

Juries like to pick winners and losers in construction disputes. Arbitrators, on the other hand, are less likely to be offended by the behavior of one side or the other, and do not usually award a full recovery to either side. Arbitrators have a reputation for “splitting the baby” (although that has not been this author’s experience in several dozen arbitrations). Court decisions can be appealed on many more grounds than can arbitration awards, but the appeals can be costly and time-consuming.

Finally, beware of subcontract provisions requiring disputes to be resolved in the courts of an inconvenient location. If you must travel to an inconvenient location to litigate a dispute, it can result in significant legal costs. (See also ASA’s Anti-Forum-Selection Clauses in the 50 States) In summary, every company should consider the types of disputes it is most likely to encounter (or has encountered in the past). If you are a company that is often fighting to be paid, immediate access to binding arbitration may be best because it eliminates the time and expense of mediation and allows you to apply immediate pressure on your customer. During contract negotiation, every subcontractor should carefully consider all aspects of the project, the contract and the key parties and decide what forms of dispute resolution makes the most sense. It is recommended that you consult with experienced construction counsel to decide what is best and to avoid agreeing to a process that will make it difficult to enforce your rights.

Timothy Woolford, Woolford Law, P.C., is a construction attorney in Pennsylvania that represents subcontractors and other construction professionals. He is also an adjunct professor of law at the Penn State Law School where he teaches construction law to second- and third-year law students.

He can be reached at (717) 290-1190 or twoolford@woolfordlaw.com.

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ASA/FASA Calendar

Coming Up in the September 2018 Issue of ASA’s

September 2018 11 — Webinar: “Electronic Takeoff Software Solutions” presented by Justin Hobby, Exactal

THE

October 2018 9 — Webinar: “Group Captive Insurance for Construction Companies“ presented by Ed Kushlis, Insurance Associates

Theme:

November 2018 13 — Webinar: “The Soft Side of Scheduling: Improving Communications Between GCs and Subcontractors” presented by Steve Groth, Chiaramonte Construction

Best Practices • Developing a Firm-Wide

December 2018

Obsession with Customer Feedback

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

• Top 10 Commandments of

Mediation

January 2019 8 — Webinar: “Work-In-Progress Reporting” presented by Stephen Blankenship, Ennis Electric

• Top Contract Provisions to

Identify When Negotiating Your Contract

February 2019 12 — Webinar: “The Best—and Worst—Construction Legal Decisions of 2018” presented by Adam Harrison, Harrison Law Group

• How to Implement an

Ownership Transition Without Disrupting Your Organization

March 2019 6–9 — SUBExcel 2019, Nashville, Tenn.

• Marketing & Sales Strategies

19 — “Lean Construction—What Subcontractors Need to Know” presented by Lean Construction Institute

• Best Practices for Adopting

New Technology for the Office and the Field

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

• Legally Speaking

May 2019 14 — Webinar: Corporate and Individual Tax Planning Under the New Tax Law, by Thomas B. Bailey, CPA, CVA, Councilor, Buchanan & Mitchell, P.C. June 2019 11 – Webinar: “A Small Business’ Guide to Human Resources” presented

by Jamie Hasty, SESCO Management Consultants July 2019

Look for your issue in September.

PAST ISSUES: Access online at www.contractors knowledgedepot.com

9 – Webinar: “Emerging Technologies—Smart Tools, UAVs and Others— and How They Relate to the Internet of Things” presented by Maxim Consulting Group August 2019 13 – Webinar: “Trade Shortage” presented by Michael Brewer, The Brewer Companies

TM

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