How Construction Regulation Changes Will Affect Your Business

by:
on September 25, 2018

The construction industry is a rapidly changing one, and the regulations that define its boundaries are constantly shifting.

Changes in presidential administrations result in lots of uncertainty about construction regulation shifts and how they might impact small construction firms.

As a construction manager, it’s vital to keep on top of these changes because they have an immediate and direct impact on your business—especially when you aren’t aware of them. These regulations create significant obligations for construction managers, who face fines or even imprisonment if these regulations are not followed.

There is a recent trend toward deregulation, which may seem like an opportunity for construction managers—but it comes with risks. Construction managers like you must understand what has been deregulated and what it means for your business, or else risk the following:

  • You might miss new business opportunities created by relaxed regulations.
  • You risk making assumptions about deregulation that may not be accurate and getting hit with penalties due to being too lax in compliance.

So what construction regulations are being rolled back, what may be enacted in the future, and what practical effect does all this have for you? Below, we break down four major recent and upcoming changes when it comes to construction industry regulation.

1. Repeal of the ‘Volks’ Rule

What this regulation is: The rule titled “Clarification of Employer’s Continuing Obligation to Make and Maintain Accurate Records of Each Recordable Injury and Illness”—also known as the “Volks” rule—was enacted in January 2017 and allowed OSHA to penalize companies for record-keeping violations that were more than six months old.

The rule was later struck down by Congress and the new administration.

What happened: In April 2017, H.J. Res 83 was signed, which nullified the “Volks” rule. The passage of the resolution means the rule will no longer take effect, and OSHA is prohibited from enacting a new rule in a similar form.

How it will affect your business: First of all, any bad record-keeping on your part that is more than six months old is probably not going to cause problems for your business.

But the elimination of the Volks rule doesn’t completely remove record-keeping requirements—companies must still record workplace-related injuries within seven days, and retain those records for five years after the 6-month enforcement period.

 OUR RECOMMENDATION:  Explore some construction management software options in our directory and find one that might help you improve your own record-keeping so you can avoid this problem in the first place.

2. Repeal of ‘Blacklisting’ Rule

What this regulation is: The White House called it the “Fair Pay and Safe Workplaces Executive Order” back in 2016 when it was issued, but opponents called it the “blacklisting” rule. It required contractors who want to work on federal projects to disclose recent labor law violations—specifically wage theft and workplace violations in the last three years.

Industry associations claimed it was an unnecessary rule that would unfairly punish good contractors by forcing them to publicize violations that had long since been dealt with, but unions and labor groups supported it as a way to protect workers against firms with poor safety records.

What happened: Legislation signed in March 2017 repealed the rule. The Congressional Review Act resolution barred the requirement, as well as some other provisions in the act such as regulations’ arbitration and paycheck transparency mandates.

How it will affect your business: If you’re planning on bidding on a federal contract, it means you won’t have to publicly reveal any incidents in the last three years where your firm was accused of shorting workers their wages or if there was any safety lapse on your project. If you have had these violations, it means you won’t be penalized during the bidding process by the federal government since they won’t know about any of these issues.

 OUR RECOMMENDATION:  No matter what the regulations are today, they can always change, so be proactive and avoid labor law violations by better managing your workforce. Explore our directory of construction scheduling software to find an option that best fits your business.

3. Infrastructure Plan

What this regulation is: In February, a $1.5 trillion infrastructure plan was unveiled. The 53-page plan would call for $200 billion in federal spending on infrastructure, with the rest covered by state and local governments.

What happened: The plan was unveiled back in February, but there hasn’t been much movement on it since then. A big part of this plan would involve a significant rollback in environmental regulations, and a relaxed Environmental Protection Agency would mean that more construction projects could get off the ground.

Because the plan would only include $200 million in federal dollars, critics argue the plan is unrealistic.

How it will affect your business: Whether this plan will ever turn into a law is a big “if,” but it is certainly something to keep an eye on.

Even if the plan never materializes, the Trump Administration has an appetite for repealing these regulations and could take other avenues to do it. If the regulations were rolled back, that means potentially many more construction projects that your firm could bid on that would not take shape otherwise.

 OUR RECOMMENDATION:  Get some good takeoff software so that you are prepared when an opportunity arises.

Construction Regulations Are Always Changing—Be Prepared

In the last couple of years, prosecutions of construction firms have been relatively few and far between. Rather than name and shame, as had been more common in the past as a way to motivate unscrupulous firms to abide by the law, today’s OSHA has focused less on enforcement and more on educating and helping employers comply.

Lax enforcement means more margin for error if an accidental lapse in workplace safety leads to an injury or workers are unintentionally shorted on their paychecks.

But it doesn’t mean you’re immune from consequences: OSHA hit a Massachusetts contractor with 18 safety violations and fined them nearly $1.5 million after a trench accident killed two workers in October 2016.

So your business has more freedom now—but what about when things inevitably change again? You need to keep up with the shifting regulatory landscape.

There are very real consequences to not complying with industry regulations, and for not being aware of major movements when it comes to construction regulation.

  • Sit down with your executive team and your workers to discuss your current compliance with regulations and how you can do better.
  • Reach out to a lawyer and conduct an audit of your firm to determine whether you are complying with current regulations or if you are exposed to serious fines and penalties. Even in a deregulated environment, one big fine could crush your business.
  • Monitor the Software Advice “Resources” page for vital updates on the construction industry, including new regulations that impact your business and other advice on how to run your firm effectively in today’s construction industry.

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