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Think Twice Before You Use Subs or 1099’s Who Can’t Speak English

Posted by Shawn McCadden on Wed, Feb 24,2016 @ 01:10 PM

Think Twice Before You Use Subs or 1099’s Who Can’t Speak English; Here’s 2 Simple Reasons Why


Subs who don't speak EnglishThe government has recently been cracking down on improper classification of workers as subcontractors.  Understanding the difference, at least in the eyes of the government, can help a remodeler avoid challenges as well as the fines and penalties that come with misclassification.  I recently became aware of an additional consideration as a result of reading an article in Remodeling magazine titled “Se Habla Ingles + No = No Deal? Get Real!”   After reading the article, but particularly the reader comments, that new consideration jumped out at me.  Using subcontractors and or 1099 workers who do not speak English can put your remodeling business at risk in at least two costly ways.



Two simple ways the language barrier can put your remodeling or construction business at risk


#1: Customer service can be compromised leading to loss of repeat work and referrals.  


Let’s face facts here; if a worker cannot speak English there will definitely be communication challenges.  This is clearly demonstrated by the comment left at the article I mentioned above.  The comment was by Perry, an actual consumer who personally experienced the challenges and disappointments caused both by the workers who could not adequately understand English as well as the business that hired them:


“It's difficult to quantify or fully explain in this comment the magnitude of problems we've had on our current job, but approximately half the problems can be traced directly back to a communication problem with the workers at the site.  I witnessed our job supervisor explaining what was needed (in as good a Spanish as he could muster), the worker acknowledging his understanding, and hours later when the completed work is inspected, it's clear the worker did not understand exactly what was needed.  This has happened repeatedly, with some of the mistakes far more costly than others.”

 

Stressed remodeling customersWhen a customer experiences what Perry speaks to its not likely the contractor performing the work will ever get future business or referrals from the disappointed customer.  Remember, quality is not just determined by the final outcome.  Quality is also determined by the experience the consumer has as the product is being delivered.

 


#2: Risk of the government deciding they are employees


Contractors should be using fixed scope contracts with subcontractors.  Subcontractor agreements should detail the work to be completed, the expected outcome, when it has to be completed and include a fixed price for the services performed.  If a subcontractor and or his/her workers cannot read a written work order due to a language barrier someone outside the subcontractor’s business will have to explain what is to be done and how it is to be done to the subcontractor.   And in the absence of the subcontractor at the jobsite someone will need to explain and direct that sub’s employees.    This type of relationship with a sub and or the sub’s employees demonstrates control by the business that hired the subcontractor.

Independent contractor oremployee questions
The IRS will consider a worker to be an employee unless independent contractor status is clearly indicated by the relationship between the worker and a remodeling business.   The way the IRS sees it an employee is a worker who performs services at the direction of an employer.  Subcontractors are considered to be in business for themselves and work under their own direction.  So simply stated anyone who performs services for a remodeler is an employee if the remodeler can and or does control what will be done and how it will be done.  Explaining things to a worker and orally directing how and in what order to perform their work therefore makes the worker an employee.

The fines and penalties for misclassification can ruin your business

As I pointed out in a previous blog post the determination by the government of misclassification of workers can be caused by many reasons.  Plus when it happens the government assumes you to be guilty until you prove your innocence.   If you cannot create a written subcontractor agreement, in the Penalties for construction worker misclassificationlanguage of the subs you work with which details the scope of work they are to perform independently, you and or your business will be forced to orally direct the work of the subs.  Once you do that the government no longer classifies them as subs, but rather as employees.  That is therefore misclassification.   According to an article at workcompcentral, in Tennessee a company by the name of Aguilar Carpentry was caught misclassifying workers and was fined $73,000In another article posted to WTNH.com a CT contractor was fined $20,240 for misclassification. Those fine amounts would put most remodelers out of business.

 

Still unsure about your relationship with sub? Here are three possible options

For a quick answer perhaps just take the quiz Remodeling Magazine recently offered titled:  "Take the Quiz: Are You Misclassifying Your Subcontractor?"  Answer the questions honestly and then see if the government would call them subs or employees.  


see all ma csl class dtaes and locations If you would like to attend a live class that includes explaining subcontractor vs. employee considerations you can check out the MA CSL Continuing Education class I teach as part of the MA Construction Supervisor License renewal process titled: Managing and Working with Sub Contractors So Everyone Wins.  You can find dates and locations at the training calendar page at my website


If you want help from the IRS and you have a lot of time to wait you can use IRS Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.   The completed form can be filed with the IRS by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status.  Unfortunately it can take at least six months to get a determination.  Additionally, often times because determining factors used by the government are not always objective, the determination may not binding.

 

 

Topics: New Business Realities, Legal Related, Subcontractor Considerations, Government Regulations, Definitions

Is Using 1099 Construction Workers Worth The Risk?

Posted by Shawn McCadden on Fri, Sep 25,2015 @ 08:03 AM

Is It Worth It To Risk Using 1099 Workers To Avoid Employee Responsibilities?

1099 construction workersMany contractors are using what are refer to as 1099 workers to avoid employee and payroll related administrative responsibilities and financial costs.  Some use this tactic to reduce their costs to help win bids and or make more money. If you never get caught you may feel or believe it was worth it. On the other hand if you get caught, whether you knew what you were doing was illegal or you really believed what you were doing was OK, the financial and litigation related costs can kill your business. The chance of this happening has dramatically increased in certain areas of the country because Washington is offering money to states to help them do so. Read on to find out about what is already happening in Virginia.

In a well written article written by Courtney Malveaux of Thompson McMullan PC, Courtney shares a scary story where a GC jobsite is inspected by VA’s version of OSHA and makes and on-site determination that certain “Independent Contractors” were actually employees, triggering the automatic loss of any ability to negotiate violation penalty reductions. The story gets much scarier as you read on; I suggest you read the whole article.

 

“Under the new policy, if the inspector declares that your contractors should be considered employees, watch out.  You’re paying full freight on each penalty, without exception.  Your only recourse would be legal action.” Courtney Malveaux

Guilty until proven innocent

The part I found most scary in the story was that the contractors who take this risk, for whatever reason they justify doing so, are automatically assumed to be guilty by the inspectors.   If that happens to you it means you are guilty until proven innocent, at your own expense to try to do so. And, even if you eventually win your legal battle, you are not entitled to receive any damages for your challenges. So your legal fees cannot be recouped.

Risk of using 1099 construction workersThat means you have to pay up on any fines, at their full rate (anywhere from $7K to 70K per violation) right away. Then you have to decide if you are willing to wait for your legal case to make it through a legal system sponsored by the same entity that is accusing your business.

 

Collateral damages may be unavoidable

From what I have witness I know the story can go even further than explained in the article. For example if the 1099’s are deemed to be employees you may also become responsible for all employment related taxes on all the money you have paid to them to date, plus fines of course. The same may happen with Workers Compensation and General Liability insurance coverage. Again the likelihood of these things happening has also become more likely. For example in Massachusetts several different state departments are participating in a memorandum of understanding, committing to refer observed violators discovered by each department to the other departments. In a 2012 article I reported on how OSHA and EPA have done the same regarding RRP Inspections.

 

1099 or employee

The Bottom Line

As a business owner only you can decide the level of risk you are willing to take on by avoiding employment responsibilities. I recognize by doing so you may be saving your business and your customers money. At the same time by doing so perhaps both of you are preventing a worker, or many workers, from having the employment rights and benefits your customers expect and even demand at their jobs. Some know they are doing it. Some, I hope, just found out.

 

Topics: New Business Realities, Legal Related, Business Management, Production Considerations, OSHA Considerations, Subcontractor Considerations, Government Regulations, OSHA - EPA Challenges, Workers Compensation, Taxes

Building the Right Team: How to Work With the Architect, Subs & Designers

Posted by Shawn McCadden on Fri, Feb 13,2015 @ 06:00 AM

Building the Right Team: How to Work With the Architect, Subs & Designers

Working with an architectAs a contractor, you know that building a custom home or doing a major remodel is not a one-person job. You need to work with an architect, an interior designer, one or more sub-contractors and any number of laborers—and, of course, the homeowner. Getting everyone on the same page can be the difference between an amazing house and a patchwork disaster.

 

Who’s the Boss?

The buck stops with the owner. The one who is paying for the work is the top dog, even if it doesn't always feel that way. Hurricane-torn Florida has some of the strictest construction laws in the nation, so let’s use it as our model. A full construction team may consist of an architect or engineer, a building contractor and an interior designer. The contractor may hire subcontractors. All of these people are, in some ways, like employees of the owner.

At the top of the chain is the architect. Since he or she is the one who has taken the owner’s ideas and turned them into schematics, all significant changes need to go through him (or her). These changes are done via a written document called a change order. The use of a change order is important and often costs money, so get agreement from the owner and interior designer before you issue one.

 

The Social Aspect

Working with design professionalsIn a study about collaboration, students from the architecture, interior design and construction schools of Mississippi State University were blended into different collaborative groups, ranging from highly engaged to mainly separated. The findings showed that the groups with the most social interaction had the most creative outcomes, though not the fastest completion rates.

Bring your construction team and your interior designer together for coffee and make them talk. With construction, speed is not necessarily your friend. Some jobs take time to do them right. If your people cannot find the time to sit and understand the project, then they will not have the time to do the job correctly. For example, a designer working with a contractor on windows and lighting might meet at a Shade Store showroom to point out ideas as they discuss them. They do not need to become fast friends, but they do need to work together on a creative level.

 

The Subs

Working with sub contractorsMost contractors do not have a licensed person on their team who can handle all the components of a construction job. For roofing, foundations, plumbing and electrical, they will usually subcontract to a licensed professional and or expert. In many cases, the interior designer may be a subcontractor of the lead contractor, making him the designer’s de facto boss. Whichever way you structure the construction process, you have some legal issues to handle. Make sure to meet with and manage your subs since, at the end of the day, you are responsible for paying them.

 

Paul Reyes-Fournier

 

Guest Blogger: Paul Reyes-Fournier has served as the chief financial officer for social service organizations, churches and schools. He created his own marketing firm, RF Media. Paul holds a BS in physics and an MBA.

 

 

Topics: Team Building, Production Considerations, Guest Blogs, Building Relationships, Subcontractor Considerations, Working with Design Professionals

Know Who You Are, Then Build a Contracting Business That Works For You

Posted by Shawn McCadden on Sun, Feb 16,2014 @ 01:10 PM

Peter Schneider

 

 

Guest Blogger: Peter Schneider, Peter Schneider Builder Contracor, Inc. has 20+ years experience and knowledge of residential custom building managing each project hands-on. He's been featured in national trade magazines and local publications and he's served on the Board of Directors of the Fairfield County Home Builders Association.  Peter offered this guest blog topic after reading my blog article titled: "Are You Less Of A Contractor If You Sub Everything Out?" I think Peter's message is a valuable one for contractors to consider.

 

Contractors; Know Who You Are, Then Build a Contracting Business That Works For You

Subs vs employeesUpon a little reflection I’ve realized there are a lot of ways to organize a contracting business, none of which are the “gold standard” and all of which either purposely or inadvertently express the personality of the owner.  At your inner core are you a manager or a craftsman? Are you a little of both? Are you neither?  Generally, I’ve noticed successful people have figured out who they are and how they add value to the equation.  Then they’ve set up a business system to capitalize on their strengths.  

If you are good with your hands, and want to be left alone to do your work, you probably will be a good one-man show type of contractor who can keep busy working for a few General Contractors. I work with carpenters, tile guys and drywall tapers that operate like this – most of whom survived the 7 year long down-turn OK.

If you can teach others a trade like framing, painting, drywall, etc, you can assemble a crew that will make you a nice profit, but you will need someone to run the “business” end of things, at your direction, leaving you free to estimate and sell and manage production. Profitably managing direct employees is a job unto itself and in my opinion is only appropriate when you have a crew that specializes in one type of work.

Peter Schneider Builder Contractor CrewIf you are excited about putting a team of specialized professional craftsmen together to construct a series of varied job types where organization & management are key elements of production & profitability, you’re a good fit for a general contractor operation. A GC set up is generally best for larger jobs like a custom home, a larger addition, or a whole house remodel job. Sometimes smaller jobs that require a higher level of craftsmanship like a special faux finish on walls, or custom built in cabinetry, or precision stone work are best left to the specialist sub contractor.  Higher end bath remodels are also a good fit for a GC with a loyal team of trade contractors. You absolutely must develop a team that you work with regularly so you can be assured of consistent quality and integration between trades.

For me, I’ve noticed the comparatively greater value of leveraging my time providing work opportunities for, and coordinating the activity of other professionals. 

There are inescapable sales, marketing and overhead costs of running a business not directly associated with performing your revenue producing activity. A good GC-Sub relationship takes this into account, or at least I like to think it does in my case.

 

 

Topics: Guest Blogs, Building Relationships, Subcontractor Considerations, Opinions from Contractors, Business Planning, Sage Advice, Business Considerations

OSHA Visits Contractor 3 Times in 33 Days, Subs Don’t Want To Come Back

Posted by Shawn McCadden on Tue, Feb 11,2014 @ 06:00 AM

OSHA Visits Contractor 3 Times in 33 Days, Subs Don’t Want To Come Back

Mark Scott of Mark IV Builders

A remodeling contractor in Cabin John, MD was visited three different times by the same OSHA inspector within a 33 day period on a Washington DC project.  The fines come to a total of $8000.  However he was told if he is willing to pay up within 15 days, not put up a fight about the charges, and make the required corrective actions, our government will give him a 25% discount.  The citation letter he received from the OSHA inspector also let him know that information about the citation would be published on the internet at www.osha.gov after 30 days.

Mark Scott, president of Mark IV Builders, told me he chalks it up to just another cost of doing business.   Fortunately for him his business is large enough to absorb such costs.  However it has put some fear into his employees as well as his sub contractors.  Both were found in violation of OSHA requirements when the inspector stopped by.  One sub, who was also cited for the same violations and fines, doesn’t want to come back to the job site, fearing additional visits and fines. 

 

All considered “serious violations” by OSHA, here are the violations as well as the fines for each:

  • OSHA Inspector visits contractor 3 timesOne employee was found using a table saw without using safety glasses.  This offense came with a $1200 fine.  The inspector noted the violation was corrected during inspection.
  • Another employee was working without a hard hat in an area where possible head injury could occur due to falling or flying objects.   This violation triggered a $1200 fine.  The inspector noted the violation was corrected during inspection.
  • Three sub contractor employees were each found to be using separate damaged extension cords.  Again, another $1200 fine.
  • A sub contractor was observed working more than 6' off the ground without proper fall protection in place, in two different areas at the job site.   This triggered a $2800 fine.
  • A sub contractor was standing on the top step of a 4’ step ladder.  This offence came with a $1600 fine.
  • Both employees and subs, while doing drywall installation, were found to be using a GFI wall outlet without a cover plate on it.   For some reason no fine was assessed for this violation.

 

What will the company do differently?

Unlike many remodeling businesses Mark IV has already embraced worker safety and OSHA requirements.   All company employees have the safety equipment needed to do their work as well as the required training to use it.  In fact Mark told me he worked with his insurance company to make sure he was in compliance and has several letters from them stating what an excellent job his company has done in regards to worker safety.     

I asked Mark what he plans to do differently now after having been written up and fined.  His answer was; “Not much.  My employees have the equipment and know what they should and should not be doing.  It’s part of playing the game of being in business”.   

One thing Mark says he will do is look into how his company and his employees should handle and manage future OSHA visits. 

 

What does Mark suggest to other contractors?

OSHA Targeting residential constructionMark shared that his first experience with OSHA was back in 1979 when working as a project supervisor. An OSHA inspector showed up at the job site with three books under his arm.   Mark said the inspector greeted him with; “You’re going to get a fine today.  I’ve got three books here and I’m sure I can find something in one of them”.  

In Mark’s opinion OSHA has no intention of proactively helping businesses comply.  He suggests taking advantage of what your insurance provider has to offer to help with worker safety and OSHA compliance.  In his experience most of the help offered has been free and can even help manage a contractor’s insurance costs. 

Check out this OSHA compliance checklist for contractors.


Topics: Worker Training, OSHA Considerations, Subcontractor Considerations, Opinions from Contractors, Government Regulations

Are You Less Of A Contractor If You Sub Everything Out?

Posted by Shawn McCadden on Tue, Jan 28,2014 @ 06:00 AM

Are You Less Of A Contractor If You Sub Everything Out?

Contractor opinions about using sub contractors

 

One contractor seems to think so...

“It is not a trend, it's simply a lame category of builder that is trying to be the "business man" builder; a middleman, if you will.”

 

A trend I have definitely seen in the past several years is that many more contractors have moved away from using employees for their production work and are using sub contractors to get the work done.  These contractors are often referred to as “paper contractors”.  Some say using subs is the way to go, others disagree completely.  Contractors as well as home owners both have varying opinions on the use of subs, that’s for sure.  But, they do get to make their own decisions on which way they want to go.

Regardless of personal preference, does choosing one way over the other make you more or less of a professional contractor?  Assuming you run a legal and legitimate business I don’t thinks so.  I have personally worked with and or have interacted with contractors using both methods.  With the right business systems in place a contractor can do a great job for his/her customers using either method and can make a good profit for the business as well.

LinkedIn Discussion ModerationThen, in a LinkedIn discussion about markup posted by Gerry Gerber, I found a comment that really stopped me in my tracks.  The discussion was posted to the Contractor Talk GroupThe commenter seems to indicate that contractors without employees, those subbing out all of their work, are not good business owners.  From his comment I also assume he thinks of such a business model a “ponzi scheme”.  In fairness to the commenter I suggest you check it out to get a full context of the discussion and his comment before you make your own conclusions. 

As an FYI, I tried to leave a comment myself but the discussion group leader must be moderating the comments before they get posted.  As of the publishing of this blog my comment hadn’t yet been posted, although many others had been.   I offered my opinion about this practice in a previous blog post.   

 

Here is the portion of the comment that jumped out at me:

“The only reason you find the need to rely more on subs to do the lion’s share of work is that you are not able to do it yourself or run a company that can do that in house. I imagine that you must consult with others that fall into this same category in order to claim that it is a trend. It is not a trend, it's simply a lame category of builder that is trying to be the "business man" builder; a middleman, if you will. It's one who wants a large percentage of revenue and profit, but can't do any of the work. I've seen plenty of them in my day. Most are semi-retired builders...or living off their wife's income in between ponzi schemes. In my opinion, that is a poor business model for the client; too much overhead and not enough production or control of the project.”

 

So, what about your opinion?

opinions about using sub contractors

 

Do you agree with commenter?  Do you see it differently? 

Everyone’s entitled to their opinion and business owners can decide for themselves how they want to run their businesses.  I hope you will offer your opinion.  I also hope you will do so professionally.

 

 

Topics: Production Considerations, Subcontractor Considerations, Opinions from Contractors

5 Examples How IRS Determines If a Construction Worker Is an Employee

Posted by Shawn McCadden on Tue, Jan 21,2014 @ 06:00 AM

5 Examples of How the IRS Determines If a Construction Worker Is an Employee

How does the IRS Determine If a Construction Worker Is an Employee

 

A good number of contractors are deciding not to hire employees as the economy and their workloads improve.  Instead, they plan to hire sub contractors to get the work done. I have talked with many of these contractors and the majority of the ones I spoke with are putting themselves at significant risks.  If you don’t know how to properly differentiate between an employee and an independent contractor you better find out.  If the IRS or another government agency decides a worker is an employee, not a sub contractor, it could cost you and your business big time.


Below are some examples of how the IRS would determine whether a worker is an employee or an independent worker. This information comes from a 2014 IRS Publication titled “Employer’s Supplemental Tax Guide”.

I hope these examples will help you properly classify your workers and help you avoid unneeded fines and sleepless nights.

 

Example 1:

Jerry Jones has an agreement with Wilma White to supervise the remodeling of her house.

The details: She did not advance funds to help him carry on the work. She makes direct payments to the suppliers for all necessary materials. She carries liability and workers' compensation insurance covering Jerry and others that he engaged to assist him. She pays them an hourly rate and exercises almost constant supervision over the work. Jerry is not free to transfer his assistants to other jobs. He may not work on other jobs while working for Wilma. He assumes no responsibility to complete the work and will incur no contractual liability if he fails to do so. He and his assistants perform personal services for hourly wages.

IRS Says… 

Jerry Jones and his assistants are employees of Wilma White.

 

Example 2:

Milton Manning, an experienced tile setter, orally agreed with a corporation to perform full-time services at construction sites.

What is an Independant ContractorThe details: He uses his own tools and performs services in the order designated by the corporation and according to its specifications. The corporation supplies all materials, makes frequent inspections of his work, pays him on a piecework basis, and carries workers' compensation insurance on him. He does not have a place of business or hold himself out to perform similar services for others. Either party can end the services at any time.

IRS Says… 

Milton Manning is an employee of the corporation.

 

Example 3.

Wallace Black agreed with the Sawdust Co. to supply the construction labor for a group of houses.

The details: The Company agreed to pay all construction costs. However, he supplies all the tools and equipment. He performs personal services as a carpenter and mechanic for an hourly wage. He also acts as superintendent and foreman and engages other individuals to assist him. The company has the right to select, approve, or discharge any helper. A company representative makes frequent inspections of the construction site. When a house is finished, Wallace is paid a certain percentage of its costs. He is not responsible for faults, defects of construction, or wasteful operation. At the end of each week, he presents the company with a statement of the amount that he has spent, including the payroll. The company gives him a check for that amount from which he pays the assistants, although he is not personally liable for their wages.

IRS Says… 

Wallace Black and his assistants are employees of the Sawdust Co.

 

Example 4.

Bill Plum contracted with Elm Corporation to complete the roofing on a housing complex. 

IRS Independent Contractor ruleThe details: A signed contract established a flat amount for the services rendered by Bill Plum. Bill is a licensed roofer and carries workers' compensation and liability insurance under the business name, Plum Roofing. He hires his own roofers who are treated as employees for federal employment tax purposes. If there is a problem with the roofing work, Plum Roofing is responsible for paying for any repairs.

IRS Says… 

Bill Plum, doing business as Plum Roofing, is an independent contractor.

 

 

Example 5.

Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours.

The details: She is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. She also performs additional electrical installations under contracts with other companies, that she obtained through advertisements.

IRS Says… 

Vera is an independent contractor.

 

Related articles:

Contractors, Will Your Use Of Subcontractors Land You In Jail too?

RRP Nightmare-GC and His Subcontractor Both Get Nailed By EPA

 

 

 

Topics: Subcontractor Considerations, Legal Considerations, Government Regulations

RRP Nightmare-GC and His Subcontractor Both Get Nailed By EPA

Posted by Shawn McCadden on Thu, Aug 15,2013 @ 06:00 AM

RRP Nightmare-General Contractor and His Subcontractor Both Get Nailed By EPA

RRP Nightmare

 

Unfortunately, complying with the EPA’s RRP rule is not simple.  And, attending the required RRP Certified Renovator Training class will not adequately educate a business owner on all of the business and production practices that must be put in place to keep the business from becoming yet another victim of the RRP Rule due to violations.  

 

Contractors need to keep in mind that ignorance about the details and requirements of the RRP rule are considered by EPA to be excuses, not reasons for non compliance.  An EPA RRP Violation press release about your business and the fines that come with it can be a real nightmare!

Click here for my EPA RRP Summary for Remodelers


What happened?

On Monday this week the EPA released a press release announcing that James J. Welch & Co., Inc. of Salem MA is facing a penalty of $28,125 for allegedly violating the RRP Rule’s requirements.

Child Occupied FacilityThe press release alleges that the violations occurred while James J. Welch & Co., Inc. was acting as the general contractor performing renovations on a project at the former Frisbee School in Kittery, Maine.  At the time of the renovation the Kittery site was a child-occupied facility and therefore was subject to Renovation, Repair and Painting (RRP) Rule.

 


Three things stand out to me as things all general contractors need to be aware of:

  1. The violation was brought to EPA’s attention via an anonymous tip.
  2. The work that was in violation was being done by a subcontractor.
  3. Both the GC and the subcontractor are facing separate fines for the violations

RRP anonymous tipIn Feb. 2012, after receiving the anonymous tip, the EPA and the Maine Department of Environmental Protection performed an inspection of the site.  Based on the inspection, EPA determined that the general contractor did not ensure that a company hired as a subcontractor to replace windows at the school, New Hampshire Glass, was complying with the required work practices required under the RRP Rule.   (EPA press release about New Hampshire Glass violations and fine)


The violations included:

  • Failure to assign a certified renovator to the work site
  • Failure to cover the ground with plastic sheeting
  • And, failure to contain waste from the renovation activity

 

Learn from their mistakes

RRP and SubcontractorsThe nightmare both of these businesses are going through should serve as a warning for other business owners.   Both general contractors and sub contractors need to know each other’s responsibilities when it comes to compliance with the RRP Rule.   By understanding the rule the GC and the sub can then come to an agreement about who will do what and when they will do it to make sure that both of them are in compliance while doing the work, as well as creating and maintaining all required paperwork and documentation.   If you do not already have these things under control at your business I suggest you read my September 3, 2010 RRPedia blog titled: Contractors and Subs Doing EPA RRP Work Will Need to Work Things Out

 

Related articles:

If a Lead Test Indicates No Lead, Can A Non-Certified Firm Do The Work?

Do My Sub Contractors Need To Be RRP Certified?

Do my subs need to be EPA RRP Certified Firms?

Insurance Companies Rethinking Coverage Due to EPA RRP Rule

 

 

Topics: Effects of the RRP Rule, Production Considerations, Subcontractor Considerations, Business Considerations, RRP Related

Checklist for Contractors Offering Snow Removal Services.

Posted by Shawn McCadden on Fri, Feb 08,2013 @ 09:17 AM

Checklist of Consideration for Contractors Offering Snow Removal Services.

Making money doing Snow removal

 

When winter snows and ice dams hit many contractors see offering snow and ice dam removal as an opportunity to make money.   If you’re considering snow removal as an opportunity for your business thinking ahead about how and where you offer it, as well as how you will perform the work, can help protect your business from inherent risks.  Thinking ahead about your approach can even help you drum up additional work after the snow has disappeared.

Offering snow removal services makes sense for many contractors 

After all, if work is slow during winter months, snow removal can bring in extra revenue.   Also, many projects come to a halt when the weather makes working outside impractical or makes going in and out of a building while working on interior renovations dangerous and messy.   If you price it correctly, offering snow removal and ice dam removal can help keep employees working and help contribute gross profit to cover business overhead.

How the snow removal checklist list came about

Offering Snow and ice removal servicesSeveral years ago I helped one of my remodeler coaching clients plan out how to offer and perform snow removal services.   He called me because he realized there were a lot of things he should consider before just sending his guys out with there with shovels and axes.  Below is a list of considerations from my coaching session notes created during my discussions with him.   By sharing my notes my hope is that you will find them helpful, you will price the work for profit, you and your employees will be safer while performing the work, you can use the opportunity to create new customers and you will generate future work from those that hire you.

 

Checklist of Snow Removal Services Considerations for Contractors:

  • Suggested he consider the work is labor intensive, he will not be earning his typical gross profit on subs or materials, be sure to price hourly rates accordingly.
  • Agreed on $300 first hour with two men, $80/hr per additional man hour.
  • 4 men doing it currently.  Full employees with Workers Compensation (WC) coverage. 
  • Charging for snow removalDiscussed properly equipping his employees to avoid risk and health problems. Confirmed he has fall protection equipment needed to meet OSHA requirements and employees know how to use it.  Should try to do as much of the work as they can from the ground.
  • Confirmed that he knows which WC classification workers will be in while doing the work and what rate he will be charged on all related payroll.
  • Discussed a variety of ways to do the work to limit residual damages.
  • Discussed setting realistic expectation with clients before doing the work. Agreed that only using a verbal agreement about services would not be acceptable.
  • Help home owners understand nature of the work, let them know that damages will happen and that he cannot guarantee preventing leaks or any possible damages inside or outside.
  • Suggested he have an agreement; created and or reviewed by legal counsel.
  • Suggested he disclaim in the agreement any water damage prevention and or remediation responsibilities.
  • Target market area Look at the work as a good way to meet new clients.  Because there might be more demand than he can service, be selective about who he will work for, make sure they fit within his target customer/location niche.
  • Suggested he make follow up calls to verify home owners are all set and happy, ask if they should come back if it keeps snowing.
  • Collect contact info including e-mail addresses so he can re-market for future work.
  • If he uses any subs make sure they are properly insured and follow OSHA requirements.  Make sure subs know not to attempt to solicit or accept any work from his customers.
  • Keep emergency contact info on site and or in each vehicle.
  • Suggest he ask about future work, both snow related and remodeling.
  • Could create a checklist of things to ask or tell customers related to the work and future work; what his company does.  Said he has already created a simple sheet listing other work they do.
  • Suggested he should be prepared regarding how to differentiate his business from other businesses offering the work. Discussed one way is to offer all clients an insurance certificate that lists the home owner as an additional insured, sent direct to the client from his insurance agent before work starts.  Verify his agent is prepared and capable to do so.
  • Suggested considering doing a YouTube video commercial about the service and put it on his website ASAP.
  • selling Ice dam removal servicesDiscourage use of Red Bull, maybe even coffee. Suggested hot chocolate and donuts.
  • Suggested refrigerator magnets would be a good leave behind.  Also consider 5-5-10 door hanger package we had discussed on a previous call about jobsite marketing.
  • Asked him what his top three takeaways from our discussion were:
  1. Caution regarding liabilities, set expectations with clients in writing.
  2. Realizes the marketing opportunity, concentrate on working for his target customer.
  3. Keep an eye on the big picture to avoid liabilities and not miss an opportunity by being blinded by a just getting the work done mentality.

 

Topics: Success Strategies, Differentiating your Business, Earning More Money, Marketing Ideas, Mentoring/Coaching, Marketing Considerations, OSHA Considerations, Subcontractor Considerations, Legal Considerations, Prequalifying, Seasonal Opportunities

OSHA Compliance Checklist: Will You Be Ready If OSHA Visits You?

Posted by Shawn McCadden on Fri, May 25,2012 @ 09:00 AM

Compliance Checklist: Will You Be Ready If OSHA Visits Your Job Site?

OSHA Compliance for ConractorsRecently there has been a lot of buzz around the remodeling and home improvement industries regarding OSHA enforcement.   OSHA has definitely stepped up its focus on residential construction.   With the onset of summer weather much more work is being done outside making it easier for OSHA Inspectors to observe not only where work is happening but also easily observe and identify violations by only having to drive by construction sites.  Inspectors have been instructed; if you see it - make a visit.  One contractor even reported that an OSHA Inspector was driving around Cambridge MA on a bicycle!

OSHA requirements are not new, even though you might think so by reading some of the banter on sites like LinkedIn.  Significant OSHA enforcement within the residential construction industry has only recently been happening and has been getting a lot of press coverage.  As a result many contractors are only just now becoming aware that OSHA compliance and the related expenses to comply apply to them.    

 

When Does OSHA Apply?

OSHA complance for subcontractorsOSHA requirements do not apply if you are the business owner and only work alone.   However, OSHA requirements do apply when employees or other workers conduct work activities at your jobsite. So, if you are a general contractor, OSHA will hold you responsible for verifying OSHA compliance and overseeing the actions of your subcontractors while at your jobsites.   

Depending on the type of work you perform, specific OSHA compliance requirements will vary.   To simplify what you need to consider, just assume that no matter what they are doing, your business is responsible to protect the health and safety of all workers at your jobsite.  To protect your business and your employees, I suggest OSHA compliance oversight should be included in the job descriptions for lead carpenters, production managers and project managers.

Be Sure To Document Worker Training

OSHA Fall protectionBelow is short a list of things contractors should consider if they want to be ready when an OSHA Inspector drives by and or stops in to check out your job site.  This list comes from Mark Paskell of The Contractors Coaching Partnership.  Mark helps contractors and their employees comply with OSHA.  He offers group training classes as well as company specific training and assistance with compliance requirements including jobsite practices and the gamut of required documentation.  When I spoke to Mark about this topic he stressed that OSHA was concentrating heavily on worker training and protection from fall hazards, and that contractors needed to have written documentation of the training they provide.

 

OSHA Compliance Checklist for Contractors:

  • Keep your job site in a clean an orderly manner
  • If on roofs above a 4 pitch use anchor points, harnesses and lifelines
  • If you do not use harnesses use guard rails
  • When setting ladders make sure they are 3 feet above the roof edge and on stable ground
  • Don't use ladder jacks with ladders over 20 feet
  • If you use ladder jacks over 10 feet makes sure you are tied off from above
  • Wear hard hats and safety goggles
  • Make sure scaffolding is set properly with planking
  • Set ladders at the right angle
  • Don't climb scaffolding bracing
  • Don't use the top steps of your step ladders
  • Use ladders and step ladders only within the manufacturer's parameters 
  • Use guard rails on pump staging and do not forget the ends
  • Cover skylights in the work area
  • Always us guard rails on landings, stairs and ramps
  • Use guard rails across large openings on upper levels
  • Don't set ladders or staging within 10 feet of power lines

 

Topics: Worker Training, Production Considerations, OSHA Considerations, Subcontractor Considerations, Estimating Considerations