The Blog

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

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

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

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

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

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

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

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.