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By: Alex Tsianatelis, Rudolph Friedmann LLP

The organization of a legal entity offers many advantages to business owners, including the opportunity for limited liability. Unfortunately, these same legal entities can also be used to mask illegal activity and launder illegally gotten money. In an effort to combat white collar crimes and security threats to the United States, the Federal Government recently enacted the Corporate Transparency Act (“CTA”) as part of the Anti-Money Laundering Act of 2020. These acts are part of the National Defense Authorization Act.

Broadly, the CTA requires that a legal entity disclose and report to the Federal Government what is referred to as beneficial ownership information (“BOI”). Legal entities that are required to file BOI reports include, but are not limited to, limited liability companies, corporations and entities created by the filing of a document with a secretary of state or similar office under the law of a State or Indian Tribe, entities formed under the law of a foreign country that are registered to do business in any State or tribal jurisdiction with a secretary of state or similar office under the law of a State or Indian Tribe. Some of the legal entities that are excepted from the BOI filing requirement are publicly traded companies, governmental entities, public utilities, certain financial institutions including insurance companies, 501(c) tax-exempt organizations, large operating companies with more than 20 full-time employees and more than $5,000,000 in operating revenue, and wholly owned subsidiaries of exempt entities. The CTA includes additional exceptions and defines with specificity many of the exceptions.

The BOI report format requires a legal entity’s “beneficial owners” and “company applicant(s)” to provide personally identifiable information (“PII”). However, only those entities who are domestic reporting companies created in the United States on or after January 1, 2024 or foreign reporting company’s first registered to do business in the United States on or after January 1, 2024 are required to report their “company applicant” information.

A beneficial owner of an entity includes an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise: exercises substantial control over the reporting company; or owns or controls at least 25% of the reporting company’s ownership interests. A company applicant is the individual who directly files the document that creates or registers the legal entity with a governmental entity and if more than one person is involved in the filing, a company applicant may also be the individual who is primarily responsible for directing or controlling the filing. The PII to be submitted by beneficial owners and company applicants includes: full legal name; date of birth; residential address or business address of applicants if made in the course of their business; unique identifying number and an image from one of the following non-expired documents or a Financial Crimes Enforcement Network (“FinCEN”) Identifier number: United States passport, State driver’s license, other government issued documentation, or foreign passport only if the person does not have the preceding documents. FinCen is a department of the U.S. Treasury Department.

For existing entities registered prior to January 1, 2024, the CTA provides a 1-year grace period to file a BOI report. The final deadline for such reporting period is January 1, 2025. For entities organized between January 1, 2024 and January 1, 2025, an entity must report within ninety (90) days of formation/registration. For entities registered after January 1, 2025, an entity must file its BOI report within 30 calendar days of registration. Failure to file BOI reports during those timelines may result in serious penalties including civil penalties of $591.00 per day or criminal penalties of up to $10,000 and 2 years in prison.

It is important to note that the duty to file is on the registered or formed entity, unless an exception applies, but the responsibility for filing will likely be the responsibility of the legal entities’ founders, executives, or other personnel they designate. It is strongly advised that each legal entity, with the advice of its legal counsel, examine the CTA to determine if they are required to file a report and whether they are excepted from providing the same.
 

 

Construction input prices increased 1.4% in February compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices increased 1.3% for the month.

Overall construction input prices are 1.5% higher than a year ago, while nonresidential construction input prices are 1.8% higher. Prices increased in 2 of the 3 energy subcategories last month. Crude petroleum input prices were up 7.5%, while unprocessed energy materials were up 3.6%. Natural gas prices declined 7.2% in February.

“For the last several weeks, inflation data have been coming in hotter than anticipated,” said ABC Chief Economist Anirban Basu. “This was also true for the February construction input price data, which indicated that upward price pressures are reemerging after a period of calm. Monthly inflation was apparent in several categories, including brick/tile, gypsum and steel mill products. With supply chains around the world rattled by military conflicts and other phenomena and workers’ wages far higher than they once were, there is reason to believe that inflation will remain stubbornly high for months to come.

“For contractors, today’s release is bad news for at least two reasons,” said Basu. “First, higher input prices implicate lower demand for construction services all else equal. With project financing costs already elevated, project owners are less likely to move forward with construction work given already high and rising input costs.

“Second, recent inflation data render it more likely that interest rates will remain higher for longer. For weeks, the conventional wisdom has been that the Federal Reserve was poised to reduce interest rates. Today’s inflation data, along with other releases, suggest that hopes for rapidly declining rates were somewhat premature.”

Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.1 months in February, according to an ABC member survey conducted Feb. 20 to March 5. The reading is down 1.1 months from February 2023.

View the full Construction Backlog Indicator and Construction Confidence Index data series.

Backlog fell for every size of contractor except for those with under $30 million in annual revenues in February. Over the past year, however, the largest contractors—those with greater than $50 million in revenues—have experienced the greatest decline in backlog.

ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels also decreased in February. However, all three readings remain above the threshold of 50, indicating expectations for growth over the next six months.

“Backlog is declining and confidence began to fade modestly in February,” said ABC Chief Economist Anirban Basu. “While it is far too early to predict an industrywide downturn given that confidence readings continue to signal growth along sales, employment and profit margin dimensions, it appears that a rising tide of project cancellations and postponements has begun to make its mark.

“With excess inflation remaining stubbornly durable, at least according to certain measures, interest rates are poised to remain higher for longer,” said Basu. “That gives higher borrowing costs more time to upset the economic momentum that has so surprised economists over the past two years and has provided support for various nonresidential construction activities. With so much federal money still entering the economy, there will continue to be support for growth in certain construction segments, including public works and manufacturing-related megaprojects, but industry weakness is more apparent in segments that rely more purely on private financing.”


Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020, to better reflect the survey period. CBI quantifies the previous month's work under contract based on the latest financials available, while CCI measures contractors' outlook for the next six months. View the methodology for both indicators.
 

 

Medford Wellington apprentice electrician Cheslie Sanon came to the U.S. from Haiti when she was 10 years old. “Since then, I’ve done everything I can to work hard and have a positive attitude.” You don’t need to talk to her for long to realize that those two traits are in her DNA.

“When I got out of high school, college wasn’t an option. I had to work.” And that’s exactly what Cheslie did. She’s been on her own since she was 17, first working as a home health aid.

After six years, she watched her cousin get into HVAC and decided to become an electrician. She found a job and enrolled in school to support herself and begin to accumulate the 8,000 hands-on hours and 600 classroom hours needed to sit for the journeyperson test, which she hopes to do this fall.

Cheslie says “you have to want it, and have patience and dedication.” She’s certainly lived up to that. For years, she went to work in the morning and had class at night. Her Mondays through Thursdays started at 6:15 am and went until 10:55 pm.

Now she’s enjoying her work at Medford Wellington. “It’s the best company I’ve ever worked for,” Cheslie says. “They acknowledge your work and give you the opportunity to grow.

She is certainly taking advantage of that opportunity, and it has built her confidence. “There’s nothing I put my mind to that I can’t learn,” Cheslie says. And she has a track record to prove it.
 

 

By: Joe Camilo, Tocco Building Systems

I’m pleased to say that I’ll be using this month’s message to convey some good news. Last month, I wrote about the Springfield Water and Sewer Commission’s split decision to use a union-only project labor agreement to build the $325 million West Parish Water Treatment Plant. But as of the end of February, I can report that the project has gone out to bid without the PLA.

The Commission wisely insisted that all the unions involved sign on to the PLA, and it set a February 16 deadline for them to do so because of the need to get construction of the treatment plant underway as quickly as possible. When the Regional Council of Carpenters missed the deadline, the Commission announced the project would proceed using free and open competition.

The decision brings a number of benefits. The more than 82 percent of the Massachusetts construction workforce that chooses not to join a union can now take part in the project, as can the many open-shop companies that are pre-qualified. The Commission and its ratepayers will benefit from the lower costs that accompany more competition.

The change of course is also a win for minority-owned contractors, the vast majority of whom are open shop. Earlier in the process, unions balked at a carve out in the PLA to allow non-union minority- and women-owned contractors to bid on contracts of $1 million or less. The unions proposed a $500,000 limit on the exception before agreeing to the $ 1 million.

As the Springfield Republican wrote in an editorial, “Now, bids from all parties will carry the same weight. And minority- and women-owned contractors will not be limited to bids of under $1 million.”

ABC MA actively advocated for the project to go forward under open competition. Chapter President Greg Beeman previously sent a letter calling on commissioners to reverse their decision to build the plant using a union-only project labor agreement. He also had a commentary on the topic published in the Republican.

It's impossible to know the outcome of the political battles in which our chapter sometimes finds itself. But you can be sure that we will always fight for the rights of our members. And when the outcome positive, as with the West Parish Water Treatment Facility, we should all take a moment to enjoy it and appreciate what ABC stands for.
 

 

By Brian A. Lynch, Esq. Rudolph Friedmann LLP

In Massachusetts, the Supplier Diversity Program is a state program that encourages state agencies to award state contracts to certified diverse businesses. To qualify for the program, companies must be certified as a diverse business in any of the following categories:

  • Minority Business Enterprises 
  • Women Business Enterprises 
  • Service-Disabled Veteran Business Enterprises 
  • Veteran Business Enterprises 
  • Lesbian, Gay, Bisexual, and Transgender Business Enterprises 
  • Disability-Owned Business Enterprises


The state’s Supplier Diversity Office (the “SDO”) administrates the certification process. The SDO notes on its website, although certification does not guarantee that a business will be successful every time it bids, it may add a competitive edge to firms seeking contracts with the government. In addition to certifying diverse businesses, the SDO also provides certified diverse firms with access to capital, training and development, networking and bidding opportunities.

Application Criteria
Under state regulations defined in 425 Code of Massachusetts Regulations Section 2.00, the applicant must prove it is at least 51% owned and dominantly controlled by principals of the same diverse category(ies). In addition to being owned by a majority of qualified individuals, the regulations require the qualified individuals to demonstrate the following core characteristics:

Control. The diverse owner(s) must demonstrate to the SDO that they have legal authority to make, and in fact do make, all major decisions of the applicant business without being subject to any agreement restricting the diverse owner’s control. The approval or veto of any other person, business, or organization cannot supersede the diverse owner’s authority to control the business. Among other criteria, the diverse owner(s) must have control over day-to-day operations, the background and technical competence relating to the business activities of the company, and a thorough knowledge of the financial structure, policies and affairs of the applicant business.

Independent. The applicant cannot be dependent upon, affiliated with, or influenced by, legally or in practice, any other person, business or organization in connection with any of its day-to-day operations or long-term affairs. Additionally, the applicant business cannot rely on or regularly utilize any employee under the direct control of another person, business or organization other than the applicant business. An applicant will not be considered independent if it presents insufficient evidence to the SDO of having the capability or capacity to perform, with its own workforce, equipment, facilities or other functional assets the services it performs.

Ongoing. The applicant must demonstrate it was not formed for the purpose of taking advantage of the certification program. The business must be actively in business with the resources needed to continually perform its services. This does not preclude the applicant from being recently formed and in operation for less than one year. Instead of looking at how long the business has been in operation, the SDO will require the diverse owner(s) to demonstrate they possess the technical experience and expertise to manage the current and future operations of the company.

Conclusion
Becoming a certified diverse business may provide you with new opportunities to contract with the Commonwealth of Massachusetts. Rudolph Friedmann LLP can advise you and your business on its potential eligibility and guide diverse business owners through the certification process.
 

Associated Builders and Contractors’ Construction Backlog Indicator declined to 8.4 months in January, according to an ABC member survey conducted from Jan. 22 to Feb. 4. The reading is down 0.6 months from January 2023.

View the full Construction Backlog Indicator and Construction Confidence Index data series.

Backlog increased to 10.9 months in the heavy industrial category, the highest reading on record for that category, and is 2.5 months higher than in January 2023. Backlog is down on a year-over-year basis in the commercial/institutional and infrastructure categories.



ABC’s Construction Confidence Index readings for sales and staffing levels increased in January, while the reading for profit margins declined. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.


“As predicted, performance in the nonresidential construction sector is becoming more disparate across segments,” said ABC Chief Economist Anirban Basu. “For much of the pandemic recovery period, contractors in virtually all segments were indicating stable to rising backlog. That remains the case for contractors most exposed to the nation’s industrial production. Reshoring and near-shoring continue to drive construction spending.

“In other categories, however, including those most interest rate-sensitive, activity appears to be slowing,” said Basu. “Developer financing has become both more expensive and more difficult to obtain over roughly the past year, in part because of rising office vacancy in many markets. That helps to explain declining backlog in the commercial category. The decline in infrastructure-related backlog may be due only to seasonality, however. There is every reason to believe that contractors specializing in public works will have a very busy year.”


Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020, to better reflect the survey period. CBI quantifies the previous month's work under contract based on the latest financials available, while CCI measures contractors' outlook for the next six months. View the methodology for both indicators.

On Feb. 9, the U.S. Department of Labor’s Occupational Safety and Health Administration sent its Worker Walkaround Representative Designation Process final rule to the Office of Information and Regulatory Affairs at the Office of Management and Budget for final review. The rule would allow employees to choose a third-party representative, such as an outside union representative or community activist, to accompany an OSHA inspector into nonunion facilities. The review at the OIRA is usually the final step in the process before a rule is officially published in the Federal Register. ABC will be meeting with the OIRA to express its serious concerns about the rule.

On Nov. 13, 2023, ABC submitted comments in opposition to the proposed rule and urged OSHA to withdraw it. ABC also signed on to comments submitted by the Coalition for Workplace Safety and Construction Industry Safety Coalition. In a press release about the proposed rule, ABC stated that “the Biden administration is trying to revive a failed Obama-era initiative, which was bad policy then and is bad policy now. This power grab does nothing to promote workplace health and safety, and instead pushes the administration’s ‘all-of-government’ agenda to encourage unions and collective bargaining. OSHA can have a bigger impact on jobsite safety by fostering positive partnerships with employers and promoting safety practices that produce results.”

On Sept. 26, ABC joined 40 other CWS members in sending a letter to the U.S. House Education and the Workforce Committee’s Subcommittee on Workforce Protections calling out OSHA for its proposed rule and the politicization of the agency that the rulemaking exemplifies. Read CWS’s press release.

On Feb. 21, 2013, OSHA issued a letter of interpretation endorsing union representatives and other nonemployee third parties accompanying OSHA inspectors on walkaround inspections at nonunion workplaces, which ABC adamantly opposed, expressing serious concerns. OSHA eventually rescinded the letter of interpretation on April 25, 2017.

ABC will continue to monitor this issue and provide updates as they become available.
 

 

The construction industry added 11,000 jobs on net in January, according to an Associated Builders and Contractors analysis of data from the U.S. Bureau of Labor Statistics. On a year-over-year basis, industry employment has expanded by 216,000 jobs, an increase of 2.7%.

Nonresidential construction employment increased by 7,600 positions on net, with growth in 2 of the 3 subcategories. Nonresidential specialty trade added 13,700 positions, while nonresidential building added 1,600 jobs on net. Heavy and civil engineering lost 7,700 jobs.

The construction unemployment rate rose to 6.9% in January. Unemployment across all industries remained unchanged at 3.7% last month.

“The construction industry added jobs for the 10th straight month in January,” said ABC Chief Economist Anirban Basu. “That was hardly the biggest story from today’s release, however, with total U.S. payroll employment increasing by a staggering 353,000 positions. That’s nearly twice the consensus forecast and represents yet another economic indicator that has surprised to the upside.

“The construction unemployment rate stood at 6.9% for the month, which is tied for the third-lowest January rate on record,” said Basu. “As a result of labor scarcity, construction wages surged in January, increasing at the fastest rate since July 2023. With both the construction industry and the broader economy continuing to grow at a rapid pace, contractors will struggle to remain adequately staffed over the coming quarters, especially with a majority of contractors intending to increase their staffing levels over the next six months, according to ABC’s Construction Confidence Index.”
 

By: Joe Camilo, Tocco Building Systems

New data show that nearly 90 percent of U.S. construction workers choose not to join a union. In Massachusetts, it’s more than 82 percent, according to federal Bureau of Labor Statistics data analyzed by unionstats.com. The open shop numbers are even higher among African-American construction workers. Yet once again we find ourselves fighting a union-only project labor agreement (PLA).

This time it’s the Springfield Water and Sewer Commission, which voted to use a PLA to build the West Parish Water Treatment Plant. The 2-1 vote came after unions made a full presentation to the Commission. Those opposed to the PLA, including ABC MA President Greg Beeman, got three minutes to make their cases during the public comment section of one of the Commission’s meetings.

The Commission’s own lawyer urged commissioners not to approve the PLA. So egregious are these policies that exclude the vast majority of the commonwealth’s construction workforce that the Massachusetts Supreme Judicial Court has ruled that they violate state bidding laws unless very specific conditions exist. Commission Attorney Norm Guz told commissioners that he did not believe the PLA met these conditions.

A couple of basic concepts are in play when PLAs are used. First, excluding open-shop contractors means fewer bidders, and fewer bidders result in higher costs. Second, with the construction industry is in the midst of a labor shortage, it doesn’t make sense to build a project on which a diverse, local workforce is a priority by excluding over 80 percent of workers, and an even higher percentage of workers of color.

ABC MA is the organization that fights on behalf of fundamental fairness when our members’ rights are being violated. Our employees routinely work side-by-side with union members on projects bid without a project labor agreement, but we don’t have that opportunity under a PLA.

Our chapter has already sent a letter calling on the Commission to reverse its PLA decision and begun making our case in Western Massachusetts media. It will always be ABC’s mission to seek a level playing field. Healthy competition is one of the things that makes this county great.