The Blog

Insurers, Issues and Indemnification: The New Cost of Delayed Reimbursement

By: Casey Sack, Esq. Rudolph Friedmann LLP

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TUESDAY, MAY 9, 2023

Massachusetts General Law Chapters 93A and 176D, long a compelling and formidable mechanism for consumers, has been extended beyond its usual confines to become a further source of consternation in the insurance industry. The Consumer Protection Act and the Unfair Methods of Competition and Unfair and Deceptive Acts and Practices in the Business of Insurance are dual sides of the same coin, often acting as the other’s counterpart when allegations of deceptive practices arise in the context of trade. A recent ruling by the Massachusetts Appellate Court affirms the influence of these two laws.

An employee for a subcontractor sustained injuries in a fall on a project site and sued the general contractor of the project for negligence. The insurance carrier of the general contractor agreed to indemnify the general contractor subject to a reservation of rights that included reimbursement of defense costs in the litigation. Instead, however, the insurance carrier waited eight months before paying any of the general contractor’s defense costs and only did so after the general contractor sued the insurance carrier for breach of contract, as well as violations of Chapter 93A and Chapter 176D.

The trial court found that the insurance carrier fulfilled its contractual obligations by acknowledging its obligations to pay defense costs at the outset of the litigation. The Massachusetts Appeals Court, however, disagreed. The Appellate Court determined that an unnecessary and unreasonable delay in payment can constitute a violation of both Chapters 93A and 176D. Although the Court refused to define unreasonable delay, the delay of seven months in this litigation was long enough for the insurance carrier to be liable for any penalties imposed by Chapters 93A and 176D.

The decision serves as a grave warning to insurance carriers that delay such reimbursement as courts may find that the insured may still have damages, even if the legal fees are eventually paid, because it may alter the manner in which an insured defends a litigation. Certainly, the threat of suffering the penalties of Chapters 93A and 176D may be enough to limit the number of disputes between insurance carriers and their insured.

During Mental Health Awareness Month, make mental health part of your company’s safety program

By: Vera Vadeboncoeur

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TUESDAY, MAY 9, 2023

Few in construction would dispute that the eight million people the industry employes nationwide are our most valuable asset. These men and women use tools every day. In May, which is Mental Health Awareness Month, we focus on making sure they have the tools they need for suicide prevention and to enhance their mental health.

May 1-5 was also Construction Safety Week. With construction being the industry most at risk for suicide deaths, we must make mental health as much of a priority as our employees’ physical safety. This awareness was behind ABC’s Total Human Health Initiative, which is focused on building a resilient workforce connected though relationships and engaged in performing construction work to a high standard. The initiative incorporates a whole-person approach to engage a person’s body, mind, heart and soul; psychological safety that is respectful and inclusive of a diverse workforce; acknowledgement of the risk of distraction; and impairment and responding with appropriate care.

This year, ABC added total human health as a key component of an effective safety program in its STEP Safety Management System, which for more than 30 years has provided the framework to measure, strengthen and build industry-leading safety programs. Any company can participate in STEP by visiting abc.org/step.

Just as ABC has done, I hope you will incorporate Total Human Health into your company’s safety program. Your employees’ overall health is key to establishing an industry-leading safety culture. Raise the bar by providing support and acknowledging preoccupying concerns in your team members’ daily lives.

There is much work to be done to equip our workforce with the mental health tools they need. Both ABC MA and out national parent organization will continue to look deeper into the complexity of conditions that affect our workforce’s decision-making process. As we learn more, we’ll pass on additional insights into how to protect our industry’s most valuable assets.

Who Bears the Burden for a Fraudulently Intercepted ACH Payment

By: Sean B. Cullen, Esq. Rudolph Friedmann LLP

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MONDAY, MAY 1, 2023

Imagine you receive an email from a known creditor containing an invoice for an account payable. The email contains instructions for you to pay the invoice through an accredited clearing house (ACH). The email further contains the creditor’s bank account information for depositing the ACH payment. You pay the invoice by depositing the ACH payment as instructed in the email. You later discover the creditor’s email system was hacked and the bank account information provided in the email belonged to third-party hackers. The creditor never received the ACH payment and has not been compensated for the goods or services it provided you. Do you still owe the creditor?

The law is still unclear. However, a recent decision on a preliminary motion by a federal judge of the United States District Court for the District of Massachusetts would indicate that, under certain circumstances, the answer may be yes. The decision sheds new light on the obligations of both purchasers and sellers when payment is made through an ACH.

Whether a purchaser is justified or excused from paying a seller due to a fraudulently intercepted ACH payment will ultimately depend on:

• Whether the seller took reasonable steps to secure or maintain its email system; 
• Whether the seller knew, or should have known, that its email system had been compromised; 
• Whether the purchaser took reasonable steps to verify the bank account information before attempting to pay the seller; and 
• Whether the seller knew or should have known that the email and correspondence was fraudulent.

The case involved a breach of contract lawsuit for the sale of eggs. At the beginning of the parties’ contractual relationship, the seller required the purchaser to enter into an ACH Agreement, which provided the terms under which the purchaser would pay the seller for the eggs. The ACH Agreement specified the bank account belonging to the seller and authorized the purchaser to make deposits into that account for payment of the seller’s invoices.

The parties’ contractual relationship was at first uneventful. The seller delivered eggs to the purchaser, and the purchaser paid the seller for the eggs pursuant to the terms of the ACH Agreement. Roughly one-year into the parties’ contractual relationship, however, the purchaser received an email that appeared to be from the seller’s email account stating that the seller’s bank account was changing and that the purchaser would receive new ACH payment instructions. Notably, the correspondence attached to the new ACH payment instructions incorrectly identified the seller’s address, contained at least one additional typographical error, and was not personally addressed or signed.

The purchaser did not require a new ACH Agreement and did not follow up with a telephone call to the seller to verify the bank account in the new ACH payment instructions. For the next three months, the purchaser made nine deposits totaling almost one million dollars into the new bank account, completely unaware that this account was in fact controlled by third-party hackers, not the seller. The purchaser became aware of the fraud only after the seller made demand upon the delinquent account.

When the purchaser failed to cure the delinquent account, the seller sued for breach of contract. In defense, the purchaser argued that its failure to pay the seller was justified.

In More Than Half of US States, at Least 90% of the Construction Workforce Does Not Belong to a Union

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TUESDAY APRIL 25, 2023

According to an Associated Builders and Contractors analysis of 2022 state union membership data published recently by UnionStats.com, at least 9 out of 10 construction workers in private industry do not belong to a union in 26 states, up from 24 states in 2021. Nationwide, a record 88.3% of construction workers do not belong to a union, according to the U.S. Bureau of Labor Statistics, up from 87.4% in 2021.

“Data continue to suggest that the vast majority of construction industry professionals freely choose not to join a union,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “This illustrates why it makes no sense for the Biden administration to continue to advance controversial policies requiring workers on federal and federally assisted construction projects to join a union and/or pay union dues through schemes like project labor agreements and other anti-competitive and inflationary policies. Worker choice and freedoms create immense value for taxpayers and the construction industry, yet the Biden administration continues to undermine these principles with burdensome regulations that needlessly raise costs on taxpayer-funded construction projects and steer contracts to unionized contractors and workers.” 

The construction industry awaits a final rule implementing President Joe Biden’s Executive Order 14063, which requires project labor agreements on federal construction projects of $35 million or more. Research has found government-mandated PLAs increase infrastructure project costs by 12% to 20%. The Biden administration is also pushing state and local governments applying for more than $250 billion in federal infrastructure grants to require PLAs in order to enhance their ability to receive federal money. This executive overreach will also exacerbate the construction industry’s skilled labor shortage of more than half a million people by excluding the 88% of the industry that chooses not to join a union and will undermine taxpayer investments in America’s infrastructure and clean energy projects. 

“ABC will continue to challenge anti-competitive regulations that favor special interests and advocate for all construction workers to be welcome to build taxpayer-funded infrastructure projects,” said Brubeck.

ABC’s March Construction Backlog Indicator Down to Lowest Level Since August 2022

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TUESDAY, APRIL 11, 2023

Posted in Construction Economic Update, Construction Backlog Indicator, Construction Confidence Index, Construction Economics, News Release 2023 

WASHINGTON, April 11—Associated Builders and Contractors reported today that its Construction Backlog Indicator declined to 8.7 months in March, according to an ABC member survey conducted March 20 to April 3. The reading is 0.4 months higher than in March 2022.

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

Backlog slipped in March and is now at its lowest level since August 2022. Backlog is down on a monthly basis in every region except for the South, which continues to be associated with elevated levels of current and future construction activity. 

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

  

“The deceleration in nonresidential construction activity may have started,” said ABC Chief Economist Anirban Basu. “With widespread fears of recession, credit conditions tightening and more decision-makers turning their attention to cost containment, new construction work may be more difficult for contractors to line up.

“While the confidence and backlog data weakened in March, they indicate a slowing of activity rather than a shift into reverse,” said Basu. “There is a widely held view that financial conditions are tightening in the aftermath of the failures of Silicon Valley Bank and Signature Bank. To the extent that this is true, one could anticipate further slowing and less industry confidence during the months ahead.” 

 

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.

 

 

March Chairperson’s Message: Women in Construction

By: Vera F. Vadeboncoeur, 2023 ABC MA chair

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TUESDAY, APRIL 11, 2023

Rarely does a day go by in which the leaders of ABC MA companies don’t strategize about how to find and retain the qualified workers we need to meet the demand for our services. Meeting the challenge will require us to broaden our search for talent.

One place we can look is in areas throughout Massachusetts where young people interested in the trades think joining a union is the only way to break into the construction industry. As part of our effort to inform more young people of the opportunities ABC MA companies offer, we have formed a partnership with the Electrical Program at Madison Park High School in Roxbury to help place their graduates in externships and jobs.

The program offers real benefits to graduates of Madison Park’s Electrical program, who will bring with them 300 apprentice hours of related technical classroom instruction to any employer that hires them. The hours can be applied to registered apprenticeship and licensing board requirements. The students will also benefit from subject matter expertise, career counseling and job placement help provided by ABCMA member companies.

Member companies will also benefit from making a new cohort of qualified young tradespeople aware of the many benefits a career in the open shop construction industry offers. Once these students graduate, we’ll be sending their resumes around for our electrical members to consider.

These young people are the new face of their trade. It’s up to us to make sure they know about the rewarding and lucrative career opportunities the open shop can offer them. For more information on employing one of the Madison Park students, contact Steve Sullivan at [email protected].

Construction Employment Decreases By 9,000 in March, Says ABC

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FRIDAY, APRIL 7, 2022 9:32 AM

Posted in Posted in Employment, Construction Economic Update, Construction Economics, News Release 2023

WASHINGTON, April 7—The construction industry lost 9,000 jobs on net in March, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Labor Statistics. On a year-over-year basis, industry employment has grown by 196,000 jobs, an increase of 2.5%.
Nonresidential construction employment fell by 1,800 positions on net, with declines in 2 of the 3 subcategories. Nonresidential specialty trade lost 6,100 positions, while the number of nonresidential building jobs decreased by 2,800. Heavy and civil engineering added 7,100 net new jobs.

The construction unemployment rate declined to 5.6% in March. Unemployment across all industries decreased from 3.6% in February to 3.5% last month.

“The March employment report may hint at growing economic weakness in the months to come,” said ABC Chief Economist Anirban Basu. “While the nonresidential construction industry lost fewer than 2,000 jobs, the addition of jobs in publicly financed construction categories masks more substantial weakness in private segments. It is precisely those private segments that tend to be most affected by slowing economic growth, deteriorating confidence and concerns regarding the nation’s banking system.

“While the nation continues to progress economically, headwinds are building,” said Basu. “Recession remains a likely outcome within the next 12 months. Contractors generally report healthy backlog and confidence regarding the next six months, but the industry may be positioned for meaningfully weaker conditions in 2024.”

Update Regarding Separation Agreements

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MONDAY, APRIL 3, 2023

In February 2023, the National Labor Relations Board (the "NLRB") issued a decision, McLaren Macomb, 372 NLRB No. 58, that impacts the use of routine confidentiality and non-disparagement provisions common in many separation agreements. Notably, this decision applies to any employees and employers who are covered by the National Labor Relations Act in the private sector, whether or not the employees are represented by a union.

In McLaren Macomb, the NLRB found that broad confidentiality and non-disparagement provisions are unenforceable and that they violate the National Labor Relations Act (the "Act") because they restrict employee rights to engage in protected, concerted activity related to the terms and conditions of employment (or former employment). For example, such provisions limit employees' ability to discuss terms and conditions of employment with other employees and also restrict their right to file an unfair labor practice charge with the NLRB or to assist the NLRB in an investigation.

Similarly, non-disparagement provisions often limit an employee's ability to express their views about the employer to a third party in an effort to seek assistance or to assist coworkers, including in connection with an NLRB investigation or litigation of unfair labor practices. For these reasons, the NLRB held that the non-disparagement provision in McLaren Macomb violated the Act, and offering a severance agreement with such terms was an unfair labor practice.

In March 2023, the NLRB's General Counsel issued a memorandum regarding the McLaren Macomb decision, stating that an employer's efforts to enforce past agreements containing such broad confidentiality and non-disparagement provisions would be considered unlawful.

Note that in most situations, agreements that apply to supervisors will not be impacted because supervisors are excluded from coverage under the Act.

In light of these developments, employers should review carefully any separation agreements offered to covered employees which reference confidentiality and non-disparagement. Note that there may be ways to draft confidentiality and non-disparagement requirements more narrowly to protect the employer's legitimate interests while not limiting employee rights under the Act. When in doubt, seek the assistance of your labor and employment counsel to help you navigate these shifting sands.

March Chairperson’s Message: Women in Construction

By: Vera F. Vadeboncoeur, 2023 ABC MA chair

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TUESDAY, MARCH 14, 2023

One of the biggest challenges our industry faces is finding enough qualified workers to meet the demand for construction services. In that environment, we don’t have the luxury of ignoring any pool of potential talent. ABC MA recognizes this fact – it’s why we’re conducting an ongoing diversity survey with proceeds from a state grant.

One result of this accelerating search for talent is growth in the number of women working in our industry. This year, March 5-11 was Women in Construction Week.

According to the U.S. Bureau of Labor Statistics, the share of women in construction is currently the highest on record, as more women learn that construction offers unique benefits and opportunities. Construction pays well for everyone, regardless of gender. Average hourly earnings are nearly $3 higher than the average of all other private industries, and those earnings are up 5% year over year.

A labor shortage also translates to the potential for advancement and career mobility. From executives and project managers to building inspectors, business developers, engineers, equipment operators, craft professionals and marketing, the opportunities are endless. Construction provides careers, not just jobs. And those family-supporting careers often don’t require a college degree – and the crushing debt that can go along with it.

Construction careers are fulfilling. Workers find purpose in building America, from megaprojects and manufacturing plants to airports and hospitals. A recent report based on the federal Bureau of Labor Statistics’ American Time Use Survey found that construction was among the sectors in which workers reported the highest levels of satisfaction, compared to other industries.

ABC MA believes that recruiting and retaining the best workers will deliver the greatest value to our member companies and the larger community. As we salute the role of women in our industry, I am honored to be the first woman to chair the Board of ABCMA. I applaud the many talented women in our organization. To learn more about opportunities in construction during 2023 Women in Construction Week, March 5-11, visit https://workforce.abc.org/.

Healey Plan Divides Oversight of Development Projects

By: Michael P. Norton/SHNS

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MONDAY, MARCH 6, 2023

Gov. Maura Healey wants to separate housing and economic development in the state's bureaucracy, mostly to give housing production the enhanced focus she says it desperately needs. But Healey doesn't want to completely shatter the connection between the two topics.

According to the details of a government reorganization bill she filed last week, Healey wants oversight of public and private community redevelopment corporations and their projects to be divided between the new Executive Office of Housing and Livable Communities, which is supposed assume all of the powers and responsibilities of the existing Department of Housing and Community Development, and the new Executive Office of Economic Development.

Oversight responsibility will be exercised by the Executive Office of Housing and Livable Communities for projects exclusively or primarily focused on housing development, according to a March 1 letter Healey wrote with her bill, and by the Executive Office of Economic Development for projects primarily or exclusively focused on commercial development.

Healey says her bill also duplicates the current legislative authorization for MassWorks, a popular infrastructure grant program, in a new "HousingWorks" statute "dedicated exclusively to funding municipal infrastructure that supports new or redeveloped housing." That change, Healey said, will ensure that officials in the new housing secretariat can make use of the grants currently provided to municipalities "pursuing smart housing growth policies."

The bill also "includes some provisions that update and streamline the organization and administration of agencies" currently under the Executive Office of Economic Development, including the Massachusetts Office of Business Development.

In her filing letter, Healey describes a "housing crisis" in Massachusetts that she says "has been in the making for decades" and contributes to a high cost of living that "places Massachusetts at a significant disadvantage as we compete with peer states to attract and retain businesses. "Cracking that problem, in an environment where key housing decisions are made at the local level, remains the challenge facing Beacon Hill.

"In short, we must create an adequate supply of housing for our young families, workers, and an aging population if we want to remain one of the best states in the nation to live and work, "Healey wrote.

Warmer weather states in the south and west have in recent years drawn new residents in part due to lower cost of living metrics. 

 

February Chairperson’s Message: Getting Back To Basics

By: Vera F. Vadeboncoeur, 2023 ABC MA chair

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MONDAY, FEBRUARY 13, 2023

If we take a moment to think about when we started in the construction industry, most of us will shake our heads at the thought of how much things have changed. Technology has transformed our lives in recent decades, and it’s unlikely that it’s changed anything more than the way we make a living.

Yet when I think back to the early days after I joined Fernandes Masonry to help my brothers, there are some things I learned that stand the test of time. I didn’t know much about either masonry or the construction industry back then, and a lot of seemingly little things could have turned into very big problems. I needed help, and it was ABC that helped me with challenges like certified payrolls and understanding the rules around what OSHA publications had to be posted in the shop.

My goal is to help member companies succeed just like earlier generations at ABC helped me. Sometimes it’s little tips for avoiding trouble by making sure all the Is are dotted at Ts crossed, and other times it’s bigger things, such as how to help member companies attract and retain the talent that’s so important to all of us right now. My focus will be on providing fellow members with the 2023 version of the help that was so important for me.

To allow me to do that, I ask one thing of you: get involved. Come to events, join a committee, and tell us about the political or regulatory challenges you face. Take advantage of the discounts on insurance and benefit costs through our ABC Insurance Trust, Self-Insured Workers’ Compensation Group and The Contractors Plan. Through our national parent organization, you can access discounts on everything from shipping to vehicle fleet management.

And don’t forget that the ABC’s fully accredited education partner, the Gould Construction Institute, is your school, and membership gets you discounts of up to 20 percent on all your education and training needs, including our new daytime electrical training program.

The pace of change just keeps accelerating, but if ABC is to continue as the voice of open shop contractors, we must continue to provide services that help all our companies succeed. Doing that is my top goal for 2023.
 

 

ABC: State Construction Unemployment Is Down in 32 States from a Year Ago

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MONDAY, FEBRUARY 6, 2023 9:55 AM

Posted in Construction Economic Update, Construction Economics, State Unemployment, News Release 2023 

WASHINGTON, Feb. 6—The not seasonally adjusted national construction unemployment rate dropped 0.6% in December 2022 from a year ago, down from 5% to 4.4%, according to a state-by-state analysis of U.S. Bureau of Labor Statistics data released today by Associated Builders and Contractors. Thirty-two states had lower unemployment rates over the same period, Iowa and Missouri were unchanged and 16 states were higher.

National NSA payroll construction employment was 242,000 higher than in December 2021. From March through December 2022, seasonally adjusted construction employment was above its February 2020 pre-pandemic peak of 7,624,000, except for a slight dip in April. As of December, it was 153,000 greater than its pre-pandemic peak. 

Residential construction employment has fully recovered, while nonresidential construction employment is still below its pre-pandemic peak. December SA residential payroll construction employment was 198,000 above its pre-pandemic peak while nonresidential payroll construction employment was 45,000 below its pre-pandemic peak.

In December 2022, 36 states had lower construction unemployment rates and 14 states had higher rates compared to December 2019.

“High interest rates are negatively affecting demand for single-family housing, yet construction employment continues to rise as builders work on their backlog of projects,” said Bernard Markstein, president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “However, developers, builders and contractors are still facing a shortage of skilled workers. So far, construction employers are holding on to their workers as they look beyond current slowing construction demand to the eventual upturn in demand for new projects. Meanwhile, nonresidential construction employers fully expect demand to rise over this year and next as more state and local projects tap into federal funds from the Infrastructure Investment and Jobs Act and move from the planning stage to the execution stage.”

Recent Month-to-Month Fluctuations  

National and state unemployment rates are best evaluated on a year-over-year basis because these industry-specific rates are not seasonally adjusted. However, due to the changing impact of COVID-19, high and rising interest rates and other national and international disruptions, month-to-month comparisons offer insight into the rapidly shifting economic environment for construction employment.

In December 2022, nine states had lower estimated construction unemployment rates than in November, 38 states had higher rates and three (Georgia, Indiana and Tennessee) had the same rate.

The Top Five States 

The five states with the lowest December 2022 estimated NSA construction unemployment rates were:

1. Colorado, 1.2% 

2. Tennessee, 2% 

3. Utah, 2.1% 

4. Florida, 2.2% 

5. Nebraska, 2.6% 

With the exception of Utah, all of these states posted their lowest December estimated NSA construction unemployment rate on record. Utah had its third lowest rate, behind 2021’s 1.7% and 2015’s 2%. 

The Bottom Five States 

The states with the highest December 2022 estimated NSA construction unemployment rates were: 

46. Illinois, 7.1% 

47. Ohio, 7.4% 

48. Minnesota, 7.6% 

49. Wyoming, 10.4% 

50. Alaska, 13.3% 

Alaska had its second lowest December estimated construction unemployment rate behind 2020’s 11.8% rate and the third largest year-over-year decline in its rate among the states (tied with Pennsylvania), behind Rhode Island and Hawaii, down 2.3% from December 2021. The other four states each had their third lowest December unemployment rate on record.

Click here to view graphs of overall unemployment rates (Tab 1) and construction unemployment rates (Tab 2) showing the impact of the pandemic, including a graphing tool that creates a chart for multiple states.

To better understand the basis for calculating unemployment rates and what they measure, check out the Background on State Construction Unemployment Rates.

Construction Adds 25,000 Jobs in January, Says ABC

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FRIDAY, FEBRUARY 3, 2023 9:31 AM

Posted in Employment, Construction Economic Update, Constuction Economics, News Release 2023

WASHINGTON, Feb. 3—The construction industry added 25,000 jobs on net in January, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Labor Statistics. On a year-over-year basis, industry employment has risen by 294,000 jobs, an increase of 3.9%.

Nonresidential construction employment increased by 19,300 positions on net, with growth in two of the three subcategories. Nonresidential specialty trade added 16,500 net new jobs, while nonresidential building added 4,000 positions. Heavy and civil engineering lost 1,200 jobs for the month.

The construction unemployment rate rose to 6.9% in January. Unemployment across all industries declined from 3.5% in December to 3.4% last month.

“It is virtually impossible to reconcile today’s employment numbers with other phenomena in the U.S. economy,” said ABC Chief Economist Anirban Basu. “America’s labor market remains red hot despite falling retail sales, declining industrial production, bloated inventories and high-profile layoff announcements.

“Today’s jobs report strongly suggests that the Federal Reserve has more work to do,” said Basu. “While many will cheer the jobs report, the bond market did not, with interest rates rising immediately in response to the persistent and surprising strength of the nation’s employment market. While contractors may be thrilled to hear that the labor market remains strong, associated upticks in borrowing costs increase the likelihood of a recession sometime later this year.

“Many contractors may shrug off such concerns given current elevated backlog,” said Basu. “ABC surveys reveal that contractors plan to continue to hire and expand operations. Indeed, the nation’s nonresidential construction industry added more than 19,000 jobs in January. But the outlook may dim later this year as the cost of project financing continues to rise, setting the stage for what could be a meaningfully weaker 2024, at least in construction segments that are primarily privately financed.”

News Release: ABC Massachusetts Announces Creation of a Student Chapter at Benjamin Franklin Cummings Institute of Technology to Mentor Construction Students

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MONDAY, JANUARY 30, 2023

Boston, MA, January 23, 2023-The Massachusetts Chapter of Associated Builders and Contractors today announced the establishment of a student chapter at Benjamin Franklin Cummings Institute of Technology, part of the ABC National Student Chapter Network. The NSCN connects ABC chapters to local colleges and universities with construction-related degree programs with the goal of building the construction management pipeline and mentoring future leaders of the construction industry.

"The ABC student Chapter program is a great opportunity for college students to become immersed in the construction industry while in college. Participants will make early connections with companies before they graduate", said Steve Sullivan, Director of Workforce Development at ABCMA, "the student chapter will provide an in invaluable opportunity to do internships, co-ops, community service projects and site visits.”

“It is a privilege to welcome the newest ABC student chapter to this national network of future construction industry leaders,” said Associated Builders and Contractors Vice President of Health, Safety, Environment and Workforce Development Greg Sizemore. “America’s economic engine is fueled by a workforce equipped with durable and transferable skill sets. Networks like these provide the right tools to the future of our workforce to cultivate long-lasting and rewarding career opportunities.”

At the local level, ABC chapters facilitate the interaction of ABC member firms with student chapters through a variety of industry association and school events, including regular membership meetings, guest speakers, internships, community service projects, fundraisers, career fairs/career awareness events, jobsite tours and other activities.

As a member of an ABC student chapter, students are given the opportunity to become more knowledgeable about the construction industry while learning the importance of the merit shop philosophy and free enterprise through active association involvement. Involvement in the student chapter provides interaction with ABC national and chapter staff, member contractors, faculty and staff, and students with similar interests and career goals.

About ABC: Associated Builders and Contractors is a national construction industry trade association established in 1950 that represents more than 21,000 members. Founded on the merit shop philosophy, ABC and its 69 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. Visit us at abc.org.

The End of an Era: The FTC Proposal to Ban Noncompete Agreements

By: Casey Sack, Esq.

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MONDAY, JANUARY 30, 2023

In a stunning proposal, the Federal Trade Commission (FTC) has proffered a universal ban on noncompete agreements. This proposal, albeit a considerable step away from the norm, was not necessarily unpredictable. Most recently, the FTC made a preliminary finding that noncompete agreements constitute an unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” If this proposal is enacted, it would have sweeping consequences in Massachusetts.

What is a Noncompete Agreement?

A noncompete agreement is precisely as it sounds. A noncompete agreement or noncompete clause is a contractual agreement or provision between an employer and a worker that bars the worker from working for a competing employer or starting a competing business. Noncompete agreements are typically within a certain geographic area and for a limited period of time after the worker’s employment ends.

Noncompete agreements have long been a source of controversy. Noncompete agreements tend to be a reliable scapegoat for stagnating pay of middle-income workers, preventing such workers from switching jobs to secure a raise.

However, noncompete agreements are not necessarily perceived as all bad. Noncompete agreements protect established companies by limiting competition within industries to allow those companies to thrive and protect the products it sells to consumers.

Scope of the Proposal 

The scope of the FTC’s proposal is quite expansive. Applicable to both employees and independent contractors, the FTC would require employers to withdraw existing noncompete agreements and to inform workers that they no longer apply. Likewise, employers would be precluded from entering into, attempting to enter into, and maintaining a noncompete agreement with a worker. Likewise, employers would not be able to imply that a worker is bound by a noncompete agreement when he or she is not.

For existing noncompete agreements, which cover a considerable portion of workers in the private sector, the proposal would require employers to affirmatively rescind existing noncompete agreements and notify workers that they are no longer subject to the agreement’s terms.

The proposed rule does provide for certain exceptions. If the proposed rule is enacted, an anticipated formidable exception is the sale-of-business exception for an owner, member, or partner who owns at least 25 percent of a business that is being sold. Specifically, the exemption also covers those who are “otherwise disposing of all of the person’s ownership interest in the business entity, or by a person who is selling all or substantially all of a business entity’s operating assets, when the person restricted by the non-compete clause is a substantial owner of, or substantial member or substantial partner in, the business entity at the time the person enters into the non-compete clause.”

Massachusetts, which currently permits the use of noncompete agreements, may see a wave of new litigation should this proposal be enacted.

Next Steps in the FTC’s Proposal 

The public will be allowed to submit comments on the proposal for 60 days, at which point the agency will move to make the proposal final. The rule would take effect 180 days after publication of the final version. This process, however, will not proceed without challenges. By way of example, the United States Chamber of Commerce has already threatened to sue the FTC over this ban.

Legal experts are forecasting for the proposal to be enacted in some form, although the scope of the enactment is difficult to predict. As such, it makes sense to assume that existing noncompete agreements will be affected by this proposal.

January Chairperson’s Message: Optimism Amid Stressful Times

By: Vera F. Vadeboncoeur, 2023 ABC MA chair

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MONDAY, JANUARY 9, 2023

It’s an honor to serve as chairperson of ABC Massachusetts for 2023, and to be the first woman to chair our chapter. It’s a particular honor to do so when five of the commonwealth’s six constitutional offices are held by women.

With a lingering pandemic, a new administration on Beacon Hill and the strange combination of an ongoing labor shortage and a slowing economy, these are certainly interesting times! Despite some of these stress-inducing realities, I remain optimistic. Part of the reason is because of all the progress we made last year under John Cruz’s kind and thoughtful leadership. We all owe him a debt of gratitude for his hard work.

We also thank Gov. Baker for support of construction and the emphasis he put on promoting vocational and technical careers. We now look forward to working with Governor Maura Healey to continue these important efforts to bring new talent into our industry.

One of the things we accomplished last year was executing on a construction diversity and apprenticeship expansion grant from the Executive Office of Labor and Workforce Development. The funding is aimed at attracting more diversity within our construction industry.

Part of the grant funded a diversity survey of ABC companies and their employees. In the first half of this year, we will produce a summary of the survey findings together with recommendations for how our member companies can expand the pool from which they draw talent by attracting a more diverse range of employees.

More good news comes in the form of a state skills capital grant of nearly $490,000 that was awarded to the Gould Construction Institute in December. The funding will allow Gould to purchase technology and equipment, including construction simulator learning systems, to update its Plumbing, HVAC, and Construction Craft Laborer industry certification training programs.

These are two of the three major state grants ABC or GCI has won in the last few years, and both will enhance our efforts to attract the new talent we need to bring into the construction industry.

Yet another reason for optimism is the initial success of Gould’s daytime electrical training pilot. You don’t need me to tell you how fast our industry is changing, and the old model of apprentices working all day, commuting to school and sitting in class for three hours may not be the recipe for addressing our labor shortage. The daytime model brings in students when they are fresh and more able to learn, and we plan to expand it to other trades.

Thank you again for allowing me to serve as your chairman, and here’s to a healthy and prosperous year ahead!

Nonresidential Construction Spending Increases 1% in November, Says ABC

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TUESDAY, JANUARY 3, 2023 11:09 AM

Posted in Construction Spending, Construction Economic Update, Construction Economics, News Release 2023

WASHINGTON, Jan. 3—National nonresidential construction spending grew 0.9% in November, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $930.1 billion for the month.

Spending was up on a monthly basis in nine of the 16 nonresidential subcategories. Private nonresidential spending was up 1.7%, while public nonresidential construction spending was down 0.1% in November.

“The average nonresidential contractor starts 2023 with considerable backlog,” said ABC Chief Economist Anirban Basu. “Not coincidentally, contractors also have significant confidence regarding current year prospects, according to ABC’s Construction Confidence Index, which indicates expectations for growth in sales and employment with margins remaining stable.

“November’s construction spending report suggests that this confidence is warranted,” said Basu. “However, there are countervailing considerations. First, growth in nonresidential construction spending in November was not especially broad. Much of the growth came from the manufacturing category, which is partially attributable to construction related to large-scale chip manufacturing facilities. The balance of growth came mostly from conservation and development, which includes flood control expenditures. Were it not for those two categories, nonresidential construction spending would have been roughly flat in November.

“Second, backlog could dry up,” said Basu. “Anecdotal evidence suggests that banks are more cautious in their lending to the commercial real estate and multifamily segments. Fears of recession this year remain pervasive in an environment characterized by high and rising interest rates. It will be interesting to see how well backlog will hold up as contractors continue to build and the economy heads toward what is likely to be a Federal Reserve-induced recession.”

Know Your Contracts: Indemnity Clause Might Not Provide for Attorneys’ Fees

By: Drew W. Colby, Esq.

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FRIDAY, DECEMBER 2, 2022 9:21 AM

Although parties often attempt to collect attorneys’ fees through indemnity clauses, courts have held that indemnity clauses do not typically permit the recovery of attorneys’ fees in disputes between two contracting parties. The so-called “American Rule” generally prohibits one party from obtaining attorneys’ fees from the other. This rule, however, does not apply when the parties agree otherwise and memorialize their intentions in their contracts. A properly drafted indemnity clause can, however, be used to recover attorneys’ fees even in non-third-party disputes but it is critical to understand the difference between a contract’s attorneys’ fees provision and the indemnification clause.

The typical indemnification clause provides that one party shall defend, indemnify, and hold harmless the other for certain claims. Massachusetts Courts have held this language “is customary in third-party indemnification provisions rather than fee-shifting positions between the parties.” Stated differently, if a third-party (that is, not one of the parties to the contract) makes a claim or files suit against Party A and seeks to recover those damages against Party A, then the contract’s indemnity provision might permit Party A to recover its attorneys’ fees from the other party to its contract (i.e., Party B). If, however, the dispute is only between the two parties to the contract (that is, a dispute between Party A and Party B), then their contract’s indemnity clause likely will not permit the recovery of attorneys’ fees by either against the other absent express language to the contrary.

To extend the collection of attorneys’ fees to disputes involving only the two parties to a contract, the contract should include express language providing for the same. For example, the parties could include language stating the indemnity provision is intended as a “fee-shifting clause”. Alternatively, the parties could state attorneys’ fees are recoverable between the parties, regardless of whether a third-party claim is involved.

In summary, unless an indemnity clause expressly includes fee-shifting language, it likely will not permit the recovery of attorneys’ fees except for third-party claims. The better approach is to clearly and expressly set forth in your contract that attorneys’ fees will be provided in the event of a dispute with the counter party to your contract.

Construction Employment Increases by 20,000 in November, Says ABC

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FRIDAY, DECEMBER 2, 2022 9:21 AM

Posted in Employment, Construction Economic Update, Construction Economics, News Release 2022

WASHINGTON, Dec. 2—The construction industry added 20,000 jobs on net in November, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Labor Statistics. On a year-over-year basis, industry employment has risen by 248,000 jobs, an increase of 3.3%.

Nonresidential construction employment increased by 16,300 positions on net, with growth registered in all three subcategories. Nonresidential building added 8,200 net new jobs, while heavy and civil engineering and nonresidential specialty trade added 5,300 and 2,800 jobs, respectively. The construction unemployment rate fell to 3.9% in November, while unemployment across all industries remained unchanged at 3.7%.

“Today’s employment report will be celebrated by many, including jobseekers and other labor market participants,” said ABC Chief Economist Anirban Basu. “Despite some recent high-profile layoffs, employers continue to hire aggressively and are increasing compensation in an effort to retain employees in the context of the ‘great resignation.’

“Normally, such dynamics would be celebrated by all,” said Basu. “However, for those who want inflation to abate, interest rates to fall and markets to be less volatile, the November jobs report is rather bad news. Those operating in real estate and construction are likely to be discouraged, as these segments are heavily influenced by interest rates, and rising borrowing costs make it more difficult to finance the next generation of construction projects.

“Moreover, while some will claim that this jobs report makes it less likely that recession is coming next year, the reality is quite the opposite,” said Basu. “The Federal Reserve will be forced to push interest rates higher for longer, and that makes a downturn more probable over the next 12 months.”

Daytime Electrical Program Launched, Progress on Diversity

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FRIDAY, DECEMBER 2, 2022 9:21 AM

My first thought about this final chairman’s message was “Has it really been a year already?” Thankfully, when I reflected more, I realized just how much has gone on in that time.

Given the pace of change in construction, activity is one of the few constants. That change extends to how we train those who are entering our industry. This year the Gould Construction Institute piloted a daytime electrical training program. Finding enough qualified workers to meet demand is one of our biggest challenges. To address it, we must make careers in construction appealing to young people, and the fact is that they would much rather train during the day when they’re fresh than work all day and then commute to a couple of hours of schooling, which is a recipe for very little family time. We hope our next step will be to extend the daytime pilot to sheet metal.

Late last year our chapter was awarded a Construction Diversity and Apprenticeship Expansion Grant by the Massachusetts Executive Office of Labor and Workforce Development. Part of this grant funded the internal diversity study of ABC MA membership. I’m proud the survey found that members have taken active steps to promote diversity, equity, and inclusion within their companies.

A final report will be issued next year. Our goal is to use the survey results to equip members with the data and resources they need to become more diverse, equitable, and inclusive and understand their organization’s diversity dynamics. This will promote workforce development by helping the companies attract and retain diverse talent, allow them to meet and exceed workforce participation goals, and provide methods for creating a more inclusive workplace.

Just last month, I was pleased to see a large turnout at out local Craft Championships at Medford Vocational Technical School. Electrical winner Nick Palmer of Nardone Electrical Corp and Pipefitting winner Patrick Walsh of DECCO, Inc. will move on to the national championships at the ABC National Conference in Kissimmee, FL in March. It’s critical that we recognize the excellence of tomorrow’s industry leaders.

The coming year will no doubt be at least as hectic as this one has been, and I’m pleased that someone as capable as Vera Vadeboncoeur will be taking the reins. I hope everyone has a wonderful holiday season. It’s been an honor to serve as your chairman during the past year.