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by Brian Lynch, Esq., Rudolph Friedmann LLP

On April 23, 2024, the Federal Trade Commission (the “FTC”) approved a new rule prohibiting employment related non-compete clauses. FTC Commissioners voted 3-2 along party lines to approve the new rule. The rule will be effective 120 days after publication in the Federal Register, and employees and employers should expect the rule to become effective on approximately September 1, 2024.

What Is Covered by the New Rule?

The new rule bans non-compete agreements or clauses for all workers going forward after the rule’s effective date. The rule also invalidates existing non-compete agreements or clauses made prior to the rule’s effective date. In other words, current agreements will no longer be enforceable.

The rule is applicable to any clause between an employer and employee that (i) prohibits a worker from, or (ii) penalizes a worker for, or (iii) functions to prevent a worker from seeking or accepting another job after the conclusion of their employment. Items (i) or (ii) can be read as a straightforward ban on clauses that prohibit an employee’s ability to accept employment with a competitor (or another employer). Item (iii) could, arguably, expand the concept of non-compete clauses to include non-solicitation clauses as well. Should a non-solicit clause be construed to functionally prevent a worker from obtaining work, the non-solicit clause could also be unenforceable under the new rule.

What Is Not Covered by the New Rule?

There are certain types of non-compete agreements that will not fall under the rule. Any existing non-compete for “Senior Executives” will still be enforceable. The FTC defines Senior Executives as any employee earning $151,164 or more annually and has a policy making position. This exemption for Senior Executives is not available to new non-compete clauses entered into after the rule’s effective date. Non-compete clauses that are related to the sale of a business are also outside of the scope of the rule and are not banned. Additionally, the FTC has enacted the new rule under Section 5 of the FTC Act, which does not apply to non-profit organizations and as such the rule cannot apply to agreements entered into with a non-profit. 

Alternatives to Non-Compete Clauses

In the FTC’s corresponding press release announcing the rule, it pointed to alternatives to non-compete agreements or clauses. The FTC noted that an estimated 95% of workers subject to a non-compete agreement are also subject to non-disclosure agreements that protect the employer’s confidential and proprietary information. Although the new rule did not include an exception if so called “Garden Leave” (compensation paid in exchange for the non-compete) is provided to a former employee, the FTC does note in the rule “that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the [the rule’s] definition, because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed.”

Challenge to the Rule

The United States Chamber of Commerce (the “Chamber of Commerce”) immediately condemned the new rule as “undermining well-established state laws that have governed the use of non-compete agreements.” The Chamber of Commerce has taken the position that the FTC is acting outside of its constitutional and statutory authority by issuing the new rule. The Chamber of Commerce has filed a complaint against the FTC for declaratory and injunctive relief in the United States District Court for the Eastern District of Texas.

New Developments  

Rudolph Friedmann LLP will provide further information on the FTC’s new rule as it becomes available. Should you have any questions on the rule’s impact on your company or your employment, please contact the attorneys at Rudolph Friedmann LLP.

On May 21, ABC joined the U.S. Chamber of Commerce and a coalition of business groups in filing a lawsuit in the U.S. District Court for the Western District of Texas, Waco Division against the U.S. Department of Labor’s Occupational Safety and Health Administration’s Worker Walkaround Representative Designation Process final ruleRead the news release announcing the lawsuit.

Effective on May 31, the final rule will allow employees to choose a third-party representative, such as an outside union representative or community organizer, to accompany an OSHA safety inspector during site inspections, regardless of whether the workplace is unionized or not.

Now, construction employees and employers could face serious safety concerns because the final rule has the potential to allow anyone on a jobsite. There simply is no business case for this final rule and no benefit during a compliance inspection.

By allowing outside union agents access to nonunion employers’ private property, OSHA is injecting itself into labor-management disputes and casting doubt on its status as a neutral enforcer of the law. This final rule negatively impacts the rights of employers while simultaneously ignoring the rights of the majority of employees who have not authorized a union to represent them. OSHA’s rule also poses unnecessary risk to the individual joining the inspection and others on the jobsite if the authorized person is not trained to safely walk a construction jobsite. The rule does not include any requirement that the authorized person be equipped or conduct themselves to the same standards as OSHA safety inspectors. Further, the final rule fails to answer who is legally responsible if the third party gets injured during the inspection or harms someone else.

In addition to the lawsuit, on May 17, ABC, as a steering committee member of the Coalition for Workplace Safety, and 57 other employer organizations sent a letter to members of the U.S. House of Representatives urging them to pass Rep. Mary Miller’s, R-Ill., Congressional Review Act resolution to nullify the final rule.

The CWS letter states, “The resolution is vital to safeguarding the mission of workplace health and safety inspections. Without this legislation, OSHA CSHOs will be forced into an impossible position of policing labor disputes, for which they are simply unequipped. It would protect employers against individuals looking to further their own agendas and safeguard their property rights. It would also protect workers’ right to have their voice heard when determining workplace representation.”

In a strong and clear decision, the Hampden Superior Court has issued an injunction preventing the Springfield Water and Sewer Commission (SWSC) from imposing a union-only project labor agreement on the construction of the West Parish Water Treatment Plant. In a decision issued on 5/16/24, Justice Michael K. Callan Wrote: "The public benefits from an open, fair, competitive and robust bidding process. The PLA requirement unnecessarily curtails that without legal justification." The legal challenge was brought by several merit shop plaintiffs, including Wayne J. Griffiin Electric, Inc. and ABC MA who were represented by atty. Chris Whitney of Pierce Atwood LLP.

"This is a great victory for open competition that benefits our members and the taxpaying public," said ABC MA President Greg Beeman. In response to the ruling, SWSC issued an addendum on 5/20 removing the PLA requirement and extending the bid dates to 6/4 for sub bids and 6/13 for GC bids.. ABC MA and the other plaintiffs are reviewing this addendum and extension to determine if it is adequate. The SWSC has scheduled a meeting in Executive Session on 5/21 to discuss the court decision.

In his decision, Judge Callan, wrote:

“The evidence before the court is that the PLA poses such a significant disadvantage to open shops as to render a competitive bid impossible. Certainly, in theory, Griffin and others can bid on the Project, but it is bidding blindly, and utterly defies common sense and logic to think that it is a real chance on "equal footing." No reasonable, otherwise highly qualified contractor or subcontractor would entertain such a colossal risk. For all intents and purposes, the PLA excludes open shops from bidding, as it essentially requires bidders to execute an agreement to use union laborers on the Project.”

There had been a lot of activity around this PLA leading up to this decision. Atty. Chris Whitney filed the request for an injunction against the imposition of the PLA on April 23. Plaintiffs are Wayne J. Griffin Electric, General Mechanical Contractors and ABC MA and the Merit Construction Alliance. In related good news, our application to the National ABC Construction Legal Rights Foundation has been approved in the amount of a $30,000 match. That is for the injunction stage – if there is an appeal phase, we could do another application.

In its 4/11/24 editorial, written before the lawsuit was filed, the Republican/MassLive wrote: “So far no party has sued to enjoin the use of the PLA. The project will likely move forward- under an agreement we consider to be based on flimsy grounds that do not meet the rigorous test set by the SJC in the Malden case.” Now that we have this court injunction, we can say that the court agrees.

In a 5/19/24 editorial, the Republican/MAssLive wrote: “ It is always refreshing to see the judiciaryperform its function correctly, as was the case with Judge Callan’s ruling, because in court cases, agencies such as the commission can’t skate by on speculative rhetoric and fear-mongering. They need to support decisions based on facts and evidence. The commission’s worry about labor unrest wasn’t based on facts or evidence, but stemmed, in our view, from being lobbied.”

The March 2024 not seasonally adjusted national construction unemployment rate was 5.4%, down 0.2% from the previous year, according to a state-by-state analysis of U.S. Bureau of Labor Statistics data released by Associated Builders and Contractors. The analysis also found that 29 states had lower unemployment rates over the same period, two states were unchanged (New Jersey and Oklahoma) and 19 states were higher.



National NSA payroll construction employment was 275,000 higher than in March 2023. Since February 2022, seasonally adjusted construction employment has exceeded its pre-pandemic peak of 7.6 million. As of March 2024, SA payroll construction employment stood at 8.2 million.



Indicating the relative tightness of the construction employment market in many states, this March, 31 states had lower construction unemployment rates compared to March 2019 (pre-pandemic) and 19 states had higher rates.


“Despite elevated interest rates, construction activity and employment continue at a healthy pace,” said Bernard Markstein, president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “Builders are hiring as they seek to replace retiring workers and anticipate winning future work. Nonresidential construction activity and employment continue to benefit from federal funding and tax incentives for manufacturers, and funding for state and local infrastructure projects is strong.”

Recent Month-to-Month Fluctuations 

In March, every state had lower estimated construction unemployment rates than in February. The last time that all 50 states had lower rates than in the previous month was in May 2018.


The Top Five States 

The five states with the lowest estimated NSA construction unemployment rates for March were:

1. Maryland, 1% 

2. North Dakota, 1.5% 

3. Utah, 1.7% 

4. Iowa, 2.2% 

5. Georgia, 2.3% 

North Dakota, Iowa and Georgia each posted their lowest March NSA estimated construction unemployment rate on record. Utah notched its second-lowest March rate, behind 2022’s 1.6% rate. Maryland had its second-lowest March rate, behind last year’s 0.8% rate.

The Bottom Five States

The five states with the highest March estimated NSA construction unemployment rates were:

46. Illinois, 8.6% 

47. New Jersey, 9.3% 

48. Connecticut and Vermont (tie), 10.2% 

50. Rhode Island, 16.2% 

Illinois had its second-lowest March NSA estimated construction unemployment rate since 2019’s 5.1%. Meanwhile, New Jersey had its lowest March rate since 2019, matching last year’s 9.3% rate. Despite posting the highest construction unemployment rate, Rhode Island had the largest monthly decline in its rate, down 8.6%. It was followed by Connecticut and Vermont.

Click here to view graphs of U.S. and state overall unemployment rates (Tab 1) and construction unemployment rates (Tab 2) showing the impact of the COVID-19 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.
 

 

The construction industry added 9,000 jobs on net in April, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data. On a year-over-year basis, industry employment has increased by 258,000 jobs, an increase of 3.2%.

Nonresidential construction employment increased by 7,800 positions on net, with growth registered in all three major subcategories. Nonresidential specialty trade added the most jobs, growing by 6,600 positions. Nonresidential building and heavy and civil engineering added 900 and 300 jobs, respectively.

The construction unemployment rate fell to 5.2% in April. Unemployment across all industries rose from 3.8% in March to 3.9% last month.

“It is really quite remarkable that the nation’s nonresidential construction sector continues to add jobs so consistently in an environment characterized by elevated project financing costs,” said ABC Chief Economist Anirban Basu. “At the heart of growing demand for construction workers in America is the prevalence of megaprojects in many parts of the country, including major manufacturing plants, data centers and public works.

“Based on ABC’s Construction Confidence Index, there is more hiring to come,” said Basu. “While there is observable weakness in certain industry segments, particularly in the challenging office market, ongoing spending growth in other construction segments has thus far more than fully countervailed that softness. Many megaprojects are just now beginning construction, strongly suggesting a stable U.S. nonresidential construction labor market for months to come. Such considerations are also consistent with relatively rapid increases in construction worker compensation during the balance of 2024.”


 

 

By: Joe Camilo, Tocco Building Systems

All of us know that the biggest asset any contractor can have is a high-quality, well-trained workforce. To make that a reality for more ABC Massachusetts members, the Gould Construction Institute (GCI) has broken ground on a new bricks and mortar facility that will enhance its curriculum with hands-on learning.

The groundbreaking took place on May 2 at the Billerica building owned by long-time member Medford Wellington Service Company, Inc., with a ceremony that included a gold sledgehammer and shovel symbolizing the groundbreaking event and was attended by staff from Gould, ABC, Medford Wellington and project construction manager Windover Construction.

Windover will be working with multiple ABC member contactors on the 12-week project to build six classrooms with state-of-the-art shop and equipment space for hands-on practical education. The facility is scheduled to be complete in time for the start of the school year in September.

Gould’s current model of renting space at night in existing schools has increasing limitations, especially as more schools host their own after-dark programs. While GCI will continue to offer classes in various locations around Massachusetts, the new facility provides more flexibility to do things like expand daytime training programs. The school started its first daytime electrical program last year. Based on its success, GCI plans to expand daytime offerings in the new facility.

Other benefits include the ability to offer apprenticeship training year-round, including a summer semester to allow students an opportunity to fast track their educational hours.

The facility will also allow Gould and ABC MA to offer workforce programs that will bring more people into the trades, such as pre-apprenticeship cohorts, youth summer camps and career fairs. From a public relations perspective, it will increase brand awareness, as the space will have GCI/ABC signage and provide a location to showcase our training programs to state and local officials.

We will continue to share updates and photos on the facility’s progress, as well as opportunities for you to learn how you can support our new educational center with a variety of sponsorship and contribution opportunities.

 

 

Associated Builders and Contractors has announced the findings from its 2024 Safety Performance Report, an annual guide to construction jobsite health and safety best practices. The report is unveiled to coincide with Construction Safety Week, May 6-10.

The annual safety report also provides a comprehensive understanding of the impact of deploying ABC’s STEP Safety Management System, which enables top-performing ABC members to achieve incident rates 576% safer than the U.S. Bureau of Labor Statistics construction industry average. Established in 1989, STEP provides contractors and suppliers with a robust, no-cost framework for measuring safety data and benchmarking with peers in the industry.

“The tools in ABC’s safety report provide a roadmap to industry leaders to win and deliver their work to communities without incident through leadership commitment, cultural transformation and industry-leading results,” said Greg Sizemore, ABC vice president of health, safety, environment and workforce development. “Top-performing STEP members measuring leading and trailing indicators are nearly six times safer than the industry average, achieving an 83% reduction in total recordable incident rates.”

  • Top management engagement: Employer involvement at the highest level of company management produces a 54% reduction in total recordable incident rates, or TRIR, and a 52% reduction in days away, restricted or transferred rates, or DART rates.
  • Substance abuse prevention programs: Robust substance abuse prevention programs/policies with provisions for drug and alcohol testing where permitted lead to a 47% reduction in TRIR and a 48% reduction in DART rates.
  • New hire safety orientation: Companies that conduct an in-depth indoctrination of new employees into the safety culture, systems and processes based on a documented orientation process experience incident rates that are 45% lower than companies that limit their orientations to basic health and safety compliance topics.
  • Frequency of toolbox talks: Companies that conduct daily, 15-to-30-minute toolbox talks reduce TRIR and DART rates by 81% compared to companies that hold them monthly.


“Both the 2024 ABC Safety Performance Report and ABC’s STEP Safety Management System will help any contractor or supplier on their safety journey,” said Sizemore. “If we choose to lead, if we choose to commit and if we choose to transform, together we will create the conditions for everyone to do their work without incident and go home safer, healthier, happier and fulfilled every day.”

“Achieving industry-leading health and safety in the construction industry is not just a goal, but a core value for ABC members,” said 2024 Chair of the ABC National Board of Directors Buddy Henley, president, Henley Construction Co. Inc., Gaithersburg, Maryland. “Including health and safety in every action requires a commitment to excellence, a culture of accountability and a relentless pursuit of ensuring every worker returns home safely every day. STEP provides the platform for every company to measure, strengthen and build their safety culture. Committing to STEP is the first step to ensuring health and safety are deeply integrated into the decision-making processes of our industry.”

For seven years, ABC’s Safety Performance Report has captured the results of ABC STEP member companies performing real work on real projects to identify what comprises an industry-leading safety program. ABC member firms participating in STEP measure their safety processes and policies on key components and the criteria for best practices through a detailed questionnaire, with the goal of implementing or enhancing safety programs that reduce jobsite incident rates.

The 2024 ABC Safety Performance Report is based on submissions of unique company data gathered from members that deployed during the 2023 STEP term, Jan. 15-Dec. 15. ABC collects each company’s trailing indicator data as reported on its annual Occupational Safety and Health Administration Form 300A (“Summary of Work-Related Injuries and Illnesses”) and its self-assessment of leading indicator practices from its STEP application. Each data point collected is sorted using statistically valid methodology developed by the BLS for its annual Occupational Injuries and Illnesses Survey and then combined to produce analyses of STEP member performance against BLS industry average incident rates. The report demonstrates that applying industry-leading processes dramatically improves health and safety performance among participants regardless of company size or type of work.

The ABC 2024 Safety Performance Report is brought to you by DEWALT, a Stanley Black & Decker brand, celebrating 100 years in business by continuing to provide customers with total jobsite and landscaping solutions.

Any company can participate in STEP. Visit abc.org/step to begin or continue your safety journey.
 

Construction input prices increased 0.4% in March compared to the previous month, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices also increased 0.4% for the month.

Both overall and nonresidential construction input prices are 1.7% higher than a year ago. Prices fell in all three energy subcategories last month. Natural gas prices were down 37%, while unprocessed energy materials and crude petroleum were down 6.9% and 0.8%, respectively.

“There has been growing evidence of resurfacing inflationary pressures in the nation’s nonresidential construction segment during the past two months,” said ABC Chief Economist Anirban Basu. “Were it not for declines in energy prices, the headline figure for construction input price dynamics would have been meaningfully higher. A new set of supply chain issues is emerging, including the cost of insuring ships and bottlenecks in the Red Sea, the Panama Canal and Baltimore.

“This is not especially good news for those who purchase construction services,” said Basu. “In addition to supply chain issues, there is an abundance of publicly and privately financed megaprojects around the nation, massively increasing demand for certain inputs, and a majority of contractors expect their sales to increase over the next six months, according to ABC’s Construction Confidence Index. With continuing wage pressures and elevated borrowing costs, the implication is that financing construction projects will remain expensive relative to historic norms for the foreseeable future.”

Associated Builders and Contractors’ Construction Backlog Indicator increased to 8.2 months in March from 8.1 months in February, according to an ABC member survey conducted March 20 to April 3. The reading is down 0.5 months from March 2023.

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

Backlog is down over the past year for every region except for the Middle States, which now has the second largest backlog of any region. The South continues to have the largest backlog despite a large decline over the past year.


Nonresidential construction employment increased by 24,600 positions on net, with growth in all three subcategories. Nonresidential specialty trade added the most jobs, increasing by 16,300 positions. Heavy and civil engineering and nonresidential building added 6,000 and 2,300 jobs, respectively.

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


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

“Given headwinds such as high borrowing costs, emerging supply chain issues, project financing challenges and labor shortages, the persistent optimism among nonresidential construction contractors is astonishing,” said ABC Chief Economist Anirban Basu. “Last month, contractors reported rising backlog and greater conviction regarding likely growth in sales, employment and profit margins.

“While certain readings are below year-ago levels, there was broad-based improvement in March,” said Basu. “For instance, in the category of profit margins, 32% of those surveyed in February expected improvement over the next six months. That share rose to nearly 34% in March, with only 24% hinting at near-term margin compression. That indicates that though costs of delivering construction services continue to rise, contractors collectively enjoy enough pricing power to support stable to rising margins. If interest rates begin to decline during the summer as is widely expected, confidence is likely to climb further.”


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.
 

The construction industry added 39,000 jobs on net in March, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data. On a year-over-year basis, industry employment has expanded by 270,000 jobs, an increase of 3.4%.

Nonresidential construction employment increased by 24,600 positions on net, with growth in all three subcategories. Nonresidential specialty trade added the most jobs, increasing by 16,300 positions. Heavy and civil engineering and nonresidential building added 6,000 and 2,300 jobs, respectively.

The construction unemployment rate fell to 5.4% in March. Unemployment across all industries declined from 3.9% in February to 3.8% last month.

“Today’s release was a blockbuster jobs report and indicates that recession is not arriving anytime soon,” said ABC Chief Economist Anirban Basu. “The 39,000 jobs added by the nation’s construction segment was roughly twice the monthly growth observed over the past year. If one focuses purely on nonresidential construction, monthly job growth was nearly 80% faster than the one-year average.

“Structural transformations in the economy, including replenished domestic supply chains, expanded data center demand and augmented infrastructure, are making it difficult for many project owners to wait for lower construction delivery costs,” said Basu. “Despite the effects of worker shortages, still-elevated materials prices, newly emerging supply chain issues and the high cost of project financing, both privately and publicly financed segments produced substantial employment growth in March. This comports with ABC’s Construction Confidence Index, which shows that a large share of contractors intend to grow their staffing levels over the next six months.

“As always, the jobs report was not completely positive,” said Basu. “Those in search of lower inflation and interest rates will not be comforted by this release. While economywide year-over-year wage growth softened to 4.1% in March, the monthly wage growth figure suggested a pace of compensation growth that will render it difficult for the Federal Reserve to substantially reduce interest rates in 2024. The notion that interest rates will remain higher for longer remains firmly in place, which means that project financing costs will likely be an ongoing issue for construction demand, especially in privately financed segments, for the foreseeable future.”