Labor Law Compliance – an Essential Issue for the Contractor’s HR Team and Counsel to Consider

Many of my clients come to me with indemnity provisions and construction contracts to review; or mid-construction disputes for delays and extras or post-construction claims for defects. These are typical issues for a “construction lawyer.” What I am seeing more, and have for the last several years are employment and labor-based issues. Recent and upcoming changes in labor laws will make these claims more complicated, and potentially more risky.

Federal and state laws intersect, overlap and occasionally contradict each other in the areas of who qualifies as an “exempt” employee. This is an essential question as it determines whether someone is entitled to overtime pay, or not. For decades, the federal tests (found in Fair Labor Standards Act) for whether an employee is “exempt” were static. Earlier this year, a dramatic change was announced that becomes effective next month.

There are two parts of the test for whether an employee is exempt. The first is a straightforward compensation test – but this is where the dramatic shift occurred. The minimum annual compensation to qualify for “exempt” status has more than doubled. Under the new federal standards, an employee cannot qualify as exempt if their cash compensation (i.e. not including benefits or allowances) exceeds $47,476. There is a second arm is a “duties” test that must be met in addition to the compensation arm.

According to a workers comp attorney, for contractors, whether your supervisors, office staff, and any other “white collar” workers are exempt and therefore not entitled to overtime compensation must be re-evaluated as of December 1, 2016. Failure to do so may lead you to spending more than you want to budget for legal fees. Overtime compensation, minimum wages, rest and meal breaks and discrimination are other areas of labor and HR law compliance that are frequent pitfalls for all employers.

Gordon & Rees’s construction attorneys work side by side with our labor and employment teams and would be happy to help you make this evaluation or address any other employment or labor legal issues you may have.