By Holly Streeter-Schaefer
Starting the year right takes time, planning and anticipating how the construction industry will evolve and shift over the coming months. Legal departments face challenges with the ever-changing construction industry landscape and legislation affecting how companies do business. So let’s take a look at issues that legal departments in the construction industry may want to consider in their business planning for 2015.
After ending 2014 on a high note with a reduction in the unemployment rate and an increase in employment, the outlook for the construction industry in 2015 is promising. With lower gas prices, commercial construction will likely see greater growth in 2015 than 2014. Because many companies and individuals left the construction industry during the Great Recession, fewer engineers, architects, contractors, and subcontractors may be competing for projects.
This shift is likely to be a short phenomenon, as new companies and individuals who were not able to find employment in recent years enter the construction industry work force.
With an increase in commercial construction projects creating the need to hire new employees, construction industry participants and their legal departments might consider reviewing their hiring practices and selection processes to be sure they are compliant with state and federal law. Along those same lines, companies may want to review their prequalification requirements for subcontractors and sub-consultants, updating the requirements for 2015.
With legislatures back in session, in-house legal departments need to closely monitor bills introduced in 2015 and modify company policies as laws enacted in 2014 take effect. Working closely with their human resources departments, corporate counsel may also want to review company benefit programs to ensure the company is complying with state laws relating to same-sex marriage legislation enacted in several states last year. With most same-sex marriage legislation effective upon enactment, legal departments may consider monitoring state bills relating to same-sex marriage closely this year. For companies working in and hiring employees in multiple states, having benefits and policies that comply with every state law can be tedious, but necessary for construction-industry participants working nationally.
Consider reviewing and updating company health and safety regulations and policies, including job-site policies, to account for legalization of marijuana in states where the company is present or may be working and employing personnel. Companies may also want to monitor legislation filed regarding legalization of marijuana, as it will likely be a hot topic for many states this year. Legal counsel needs to be aware of when such enacted legislation becomes effective, involving their human resource, risk management, insurance and safety departments as necessary.
Crude oil prices at the lowest price in years may create volatility in construction projects planned in the oil, gas and energy industries in 2015. Projects may shift from one industry sector to another, creating the need for engineers and contractors to be nimble, able to shift their focus quickly as projects are scaled back in one area and increased in others. For example, the number of refinery construction projects contemplated for 2015 before the drop in crude oil prices may decrease, but with lower gas prices leading to more money in consumers’ pockets, manufacturing and industrial construction projects may increase. As companies realign their focus to track with market changes, in-house counsel and legal departments should consider reviewing and updating their standard contract forms now to reflect changes needed based on markets being pursued and to be ready for any shift in the industry.
Construction-industry participants and their counsel may want to review changes to the federal and state wage determinations for their organizations, and monitoring the certified payroll of their lower-tier contractors and consultants. In many cases, companies will be mindful of the changes internally, but forget that the changes affect their lower tiers. In-house counsel might consider working with their company’s accounting and payroll departments as well as project management teams to account for the changes to the wage determination for its own payroll and its lower tiers.
In-house counsel for federal contractors and service providers may also want to review any changes to the Federal Acquisition Regulations early in 2015. Lunch seminars for company employees led by legal departments can be a great way to inform internal clients of changes to the regulations affecting their business and contracts.
Taking time at the beginning of the year to consider reviewing standard contract forms, wage-determination changes, company benefits, and monitoring legislation affecting the construction industry, provides in-house counsel with the opportunity to start the year with a solid foundation. Keeping internal clients informed of changes in the law and how it affects their business is a never ending process, but focusing efforts early in 2015 on these issues will get the New Year off to a promising start.
Holly Streeter-Schaefer, lawyer, Burns & McDonnell