Social Media for Roofing Industry Professionals

Social media is everywhere — from TikTok videos to Instagram posts to LinkedIn professional updates. Consider these social media statistics:

  • At the end of 2019 the total worldwide population was 7.8 billion people.
  • The internet had 4.54 billion users.
  • There were 3.725 billion social media users, just under 50 percent of the world’s population.

The average person has 7.6 social media accounts and spends a staggering 142 minutes a day on social media, according to Brandwatch.com. Eighty-one percent of small and medium-sized businesses are on social media, and 91 percent of retail brands have two or more social media channels.

If you work in the roofing industry either as a contractor, employee, architect, construction materials manufacturer or consultant, why does social media matter and what platforms are right for you?

Audience

To use social media effectively, you must first understand who you are trying to reach — customers, potential employees, or both. Once you figure out who you want to reach, determine which social media platforms they use. This will tell you where you want to be active. Start with the basics: LinkedIn, Twitter and Facebook (you don’t want to spread yourself too thin). If you have the resources, YouTube and Instagram visuals broaden your potential to reach an even larger audience. According to the construction marketing association, 50 percent of construction marketers say LinkedIn and Facebook are the two most effective channels to reach members of the industry.

Facebook

Facebook is a very dynamic platform, allowing you to highlight your customers, tagging them in your posts and they in turn can engage with your posts (sharing with their friends or asking your company questions, for instance). On Facebook you can also easily include contact information about your firm. (e.g., blogs, e-books).

Twitter

Twitter allows organizations to talk with audiences in a way that other social networks do not. Companies use Twitter to connect with users in real time, answering questions, posting updates, and replying to other posts. You can engage on Twitter by simply “liking” or retweeting content. You can also share short tips and exercise thought-leadership as well as easily connect with other influencers. It’s also a great platform to engage in real time with people live at events.

LinkedIn

LinkedIn is a business-oriented social networking site which is primarily used for professional networking. LinkedIn currently has more than 575 million registered users and 260 million active users. It is a strong platform for business development. Here, you can connect with like-minded roofing companies and suppliers, list jobs opportunities within your company, network for new projects and share news updates.

Share-Worthy Content

Once you get started, assess your content frequently. A good way to tell whether or not you’re sharing great social media content is to ask yourself this: If I didn’t work for this company, would I look at this post? If the answer is no, it’s a sign you need to revamp your content. Make social media about your audience, not just your business. That way, even if you’re in a highly specialized industry, you can still deliver share-worthy content on social media and continue to build your audience.

Finally, be sure to add visuals — photos, charts or other graphics. Humans are visual creatures, and the saying “A picture is worth a thousand words” particularly holds true with social media. Adding a photo that shows your team at work on a roof or a recently completed project will certainly appeal to your audience. You can also consider unique imagery that gives your followers an inside look at your company. Using photos in your posts has been proven to significantly boost engagement.

About the authors: Louisa Hart of Precision Public Relations Inc. provides expertise in media outreach and internal communications for a wide variety of clients in the private, public and non-profit sectors. Hart has taught on the university level, at The American University in Washington, DC, and at the EW Scripps School of Communication at Ohio University.

Mittie Rooney, Principal, Axiom Communications, has expertise in the development and execution of media, relationship marketing, social marketing and public education campaigns for and providing strategic counsel to corporations, technology start-ups, trade associations and the federal government.

Social Media Tips

The following tips should be helpful, whether you are just starting out, or have years of experience navigating the social mediasphere.

1. First, can you describe the “voice” of your social media outreach? This is not necessarily a real person — it probably isn’t — but an ideal representative who can appeal to your audience, using language that they understand and referencing issues or values they share. Is this the voice of your corporate leadership? An employee? What age and gender are they? Are they a friend of the reader? Do they have a good sense of humor? You should be able to define this individual very well and know why he or she will appeal to the audience you are trying to reach. A conversational approach is usually the best way to engage your audience. Humanize your feed, and remember that you are connecting with people, one person at a time.

2. Plan before you start. And if you have already started, assess your social media strategy at least every six months. It’s tempting to let your social media accounts take on a life of their own, but they need the same attention that you give to your other communications outreach tactics. A good place to start: define three actionable, measurable objectives that clearly support your business goals.

3. Decide what constitutes success, and be ruthless about judging your results. You may have a lot of Twitter followers, but if they are not the right people to help you grow your business, then it is wasted effort. Don’t focus on “vanity” metrics. Aggregate numbers mean something, but they don’t tell you everything you need to know about the impact of your social media efforts.

4. Continue to invest in social media and make sure it is absolutely current. Set a minimum of how often you will add new content. And clearly define staff responsibilities for your social media efforts.

5. Don’t forget about video content. This doesn’t need to be complicated. Your smart phone can capture the excitement of a new product launch, or the expertise of your employees in the field. A live feed on Facebook can generate multiple times the engagement of a recorded feed.

6. Cross-promote your social media feeds. You should think of your online presence as an interrelated whole. The “voice” of each platform does not have to be the same, but these voices should talk to each other. Take one piece of content and make it work across all of your social media platforms.

7. Pay attention to hashtags. Identify a set of up to 50 that you will use repeatedly to clarify your brand identity.

8. Publish, and then republish. Most likely much of the material you will generate will be “evergreen” so don’t feel you have to come up with something new every day. In fact, material that repeats your key messages should be used several times.

Construction Contracts and Coronavirus Complications

As a result of the novel coronavirus (COVID-19), many construction projects around the United States have been, and are being, significantly delayed or curtailed. In many instances, the delays have arisen from supply chain disruptions, state or local government stay-at-home orders, new safety protocols, and workforce disruptions on every level of the construction project — design, field construction, manufacturing, and inspection.

One thing certain to change in the post-COVID-19 world will be protection clauses in construction contracts. Boilerplate legal terms typically couched in fine print, such as “force majeure” and “frustration,” will be closely reviewed by contractors, owners, and their attorneys in the future.

Depending on the circumstances and the terms of the construction contract, the effects of COVID-19 may allow a party to invoke different rights to relief and compensation, or otherwise excuse delays or non-performance. Whether a party to a construction contract will be relieved, compensated, or excused from performance will depend on, among other factors, the language of the force majeure clause, the facts at issue, and the law governing the contract.

Construction businesses should consider the following with regard to current and future contracts:

  • Does the COVID-19 disruption constitute a force majeure event under the contract?
  • Is epidemic, pandemic, or illness specifically identified in the force majeure clause?
  • If not, does COVID-19 fall under some other event often referenced in force majeure clauses, such as an “act of God,” a “natural disaster,” or something beyond the contractors’ control?
  • Does the force majeure clause entitle parties to extensions, termination, or some other form of relief or modification?
  • Does the law that controls the contract — federal, state, or international — reinforce or limit how the force majeure clause is applied?
  • Are there alternate avenues for relief outside of the force majeure clause, such as commercial impracticability or impossibility?
  • How should parties impacted by COVID-19 reserve their rights or document their position?

Force Majeure Clauses: Events and Interpretation

Force majeure clauses set forth certain conditions under which a party is permitted to extend, suspend, or terminate a contract as a result of unexpected and unavoidable events. Under U.S. common and civil law, force majeure protection generally extends to natural and unavoidable catastrophes that impact the parties’ ability to perform their contractual obligations and allocates the risk in such events.

So, what constitutes a force majeure event? Generally, a force majeure event exists where said event is unforeseeable and outside of the contractor’s control. In addition to the specific facts at issue, determining whether a force majeure clause offers relief for such an event will likely depend on three factors: (1) whether the language in the force majeure clause specifically references the event as beyond the parties’ control; (2) whether the force majeure event was unforeseeable; and (3) whether the force majeure event caused the party’s non-performance.

In analyzing the contract language, look to see if the force majeure clause specifically references events like “epidemic,” “pandemic,” or “outbreak of disease.” If so, then COVID-19 is almost certainly covered by that cause. Courts will generally construe the precise language of the force majeure clause to exclude events that are not specifically identified. To that end, if the force majeure clause limits covered events to those involving nature, such as “severe floods,” “hurricanes,” or “earthquakes,” the court may be less likely to find that the parties intended to cover the COVID-19 pandemic.

Analysis of specific language used in construction contracts is critical. Standard form contracts, such as AIA and ConsensusDocs, do not have specific force majeure clauses but do, however, contain excusable delay clauses that could likely be applied to COVID-19 delays. For example, AIA forms generally contain language concerning excusable delays, termination, and suspension of work while ConsensusDocs expressly provide relief for “epidemics” as well as termination and suspension of work.

In some instances, the force majeure clause may contain both specific and broad forms of events and include a catchall provision intended to cover potential scenarios other than specific events. Some courts have deferred to common law principles such as unforeseeability to determine whether the event in question is covered by the contract. There, the determination would ultimately depend on what the parties contemplated and if the parties voluntarily assumed the risk of COVID-19, or, more likely, a general pandemic.

Finally, the force majeure clause may reference “acts of God” as an excusable delay or grounds for suspension or termination of the contract. Whether COVID-19 falls under the definition of “acts of God” is dependent on the state where the contract was entered into or where the contract will be performed. Where a state defines an “act of God” to include wars, riots, floods, epidemics, and natural disasters, COVID-19 would likely be covered. However, where a state more narrowly defines “acts of God” as something caused by nature, COVID-19 may not be covered and the court will likely defer to what the parties contemplated with regard to risk allocation.

Other Force Majeure Considerations

A construction business seeking to invoke a force majeure clause must follow the contractual requirements for doing so. A party should pay particular attention to the form and substance of any required notice as well as time limits to provide such notice as required by the contract. Many states demand strict adherence and compliance with the notice requirements, and failure to adhere to even one aspect could render a claim or request for extension void or result in a waiver of entitlements to relief. Parties should keep in mind that a force majeure event that is continuing in nature, or otherwise evolving, such as COVID-19, the contract may require regular updates and reporting of extra costs in order to obtain relief.

COVID-19 will likely not be interpreted as an event that completely relieves a party from its contractual obligations. As such, the general principal of construction contracts that all parties to the contract must mitigate and minimize the impact of adverse events, will apply. Depending on the circumstances and the terms of the contract, the duty to mitigate could include incurring extra costs as the affected party or serve as a condition to relief.

Generally, a force majeure event will only temporarily excuse performance of those obligations impacted by the event, meaning both the affected party and unaffected party must continue to perform contractual obligation not impacted by the event. Upon the occurrence of a force majeure event, an affected party may, however, claim extension of time for performance based on the impact of the event or as long as the event prevents performance, provided that the contract permits such extension. In drastic situations, the contract may also permit termination of the contract should the event continue for a certain extended period of time. Such clauses may require that all or substantially all of a party’s obligations be affected for a specific period of time before termination is permitted. In these situations, parties generally agree to share the costs of the delay.

Planning for the Future

Contractors entering into construction contracts in the future should take necessary steps to minimize the likelihood of disputes, claims, and litigation resulting from the occurrence of force majeure events. When seeking to limit exposure, contractors must be specific and clear in their contract language when defining the scope and effect of a force majeure clause to protect themselves from unexpected liabilities. Moving forward, parties to a construction contract should address future concerns by drafting more precise force majeure definitions, develop flexibility in supply chains to reduce risk of disruption, maintain appropriate records of cost increases, and consider the inclusion of a well-drafted termination clause.

About the author: Keith A. Boyette is an attorney with Anderson Jones, PLLC in Raleigh, North Carolina, a law firm with attorneys licensed in North Carolina, South Carolina, and Georgia. For more information or questions about this article, please email him at kboyette@andersonandjones.com.

Author’s note: This article is intended only for informational purposes and should not be construed as legal advice.

Creative Ways to Fill the Roofing Labor Gap

Ever since business rebounded following the 2008 housing bust, the roofing industry has experienced significant workforce shortages. These shortages have persisted even as the global landscape has shifted due to the COVID-19/coronavirus pandemic, which has disrupted almost every industry, including the home improvement sector. Millions of people are unemployed, largely due to the virus. However, many contractors and businesses have been deemed essential businesses.

With the growing need for essential workers, roofing contractors have an advantage finding skilled laborers during this challenging time. Here are a few creative ways to attract talent to your workforce.

Differentiate

It is evergreen advice that to attract top talent you need to offer a competitive edge or angle.

In marketing, that’s called strategic differentiation. Your differentiator could be offering a superior wage to attract workers. Consider some of these cost-effective methods and perks to have your company stand out as a place that skilled workers want to work.

· Training. Companies with a long-term view can differentiate themselves by offering informal or formal apprenticeship or mentoring programs. This helps a potential employee see that you’re willing to invest in their future. This strategy can be pulled off by having one or more knowledgeable and communicative senior employees step up to guide junior-level employees. Another avenue is to offer workers subsidies or rebates for continuing education at local community colleges.

· Flexible work hours. Potential workers can be attracted by offering the opportunity to shift off of a regular 9 to 5, five days per week schedule. Such flexibility can bring people into the labor force who otherwise can’t due to child care, elder care, or the need for a second job.

Diversify Your Labor Force

Another way around the tight market is to diversify the composition of your labor force. Women are increasingly filling historically male roles — why not in roofing? And, consider workers who have been displaced by the recent COVID-19 pandemic, such as those coming from retail, manufacturing, or agriculture. While they won’t arrive with the exact skill set you’d most hope for, these employees can come up to speed quickly to fill their gaps. Make sure your job postings make it clear you will consider people of all types, and especially those not traditionally in the roofing space. A diversified workforce can also bring your business new ideas that can help in unexpected ways.

Expand Your Radius

Consider recruiting further outside the city. Rural areas typically have fewer employment opportunities, thus there are more workers looking for jobs. You can also look to neighborhoods adjacent to industrial areas where workers have been displaced. This strategy depends on geo-targeting those potential employees as well as adjusting your employment offer to meet their needs.

Increase Referrals

Like many small businesses, roofing contractors often rely heavily on getting new employees through referrals from employees, family, and friends. Think about systematically increasing this referral stream. One of my favorite resources on this topic is from Tim Templeton’s book The Referral Of A Lifetime. At the risk of oversimplifying his approach, here’s a summary of the key takeaways:

· Be clear on why you’re a great employer. It’s crucial to have your own clarity on why you are a different and better employer. If you can crystalize that differentiation, and communicate it, you will attract interest from talented individuals from varying backgrounds.

· Ask. This is hard for many people, but it’s essential to let trusted contacts in your network know that you are looking for employees and to ask them to help you. If you don’t ask, they won’t know that they can help.

· Thank them. When your network contacts refer employees to you, an evergreen recommendation is to take the time to thank them for the help. It’s surprising how many people forget this. Your thank you might be a simple handwritten note or a heartfelt personal email. Even more effective is a shared beverage or treating them to lunch. Explicit thank-yous encourage repeat good behavior by your network. Even closer to home, when an employee refers a friend to come work for you, that’s the time for a good, hard cash bonus.

Get Digital

For new employee recruiting, specific resources like Construction Jobs provide online job forums for people specifically looking for your type of career. Also consider Craigslist, which has become the classified ads of our day. And, for the strategy of recruiting outside of the expected demographics, you might try recruiting sites like Indeed to set up your listings and profile to accept a broader range of applicants.

Automating ancillary tasks with digital tools can also help you adapt to the worker shortage. Services like JobNimbus make it easy to track your roofing projects, recruitment efforts, and most routine tasks. These tools keep tabs on your current workforce, plan, and track what they should be doing and are actually doing on an hourly and daily basis. It can keep all of your ongoing roofing work organized.

During the COVID-19 pandemic, recruiting new talent can be essential for sustaining your business. Use this time to recruit digitally and set up for success tomorrow— and well into the future.

About the author: Jason Polka is the CEO of Modernize, a company that uses business intelligence software to connect homeowners with contractors. Polka has led numerous initiatives to identify and execute new service and differentiated product opportunities within the contractor referral market. For more information, visit www.modernize.com/pros.

Good News For Businesses: The New Joint-Employer Standard

For the first time in more than 60 years, the U.S. Department of Labor (DOL) updated and revised its regulations for determining joint employer status under the Fair Labor Standards Act (FLSA), which governs federal minimum wage, overtime, hours worked, and recordkeeping obligations.

Over time, federal circuit courts have developed a number of different approaches for determining joint employer status, resulting in uncertainty for employers and workers, as well as increased compliance and litigation costs. The final rule issued by the DOL is intended to reduce uncertainty over joint employer status, promote greater uniformity among court decisions, reduce litigation, and encourage innovation in the economy.

The DOL’s Joint Employer Rule

The new rule, which took effect on March 16, 2020, limits the situations under which employers, such as contractors and subcontractors, are considered to jointly employ a group of workers under the FLSA. Under the FLSA, entities or individuals may be considered a “joint employer,” and therefore jointly and severally liable for the FLSA obligations, if it exercises sufficient control over the terms and conditions of another’s employer’s workers. But what exactly does that mean?

The DOL’s final rule sets forth a four-factor balancing test, replacing the previously applicable “not completely dissociated” standard, to assist employers with determining whether it will share liability for FLSA violations. To determine whether a second individual or entity is a joint employer of a worker, the DOL will examine whether the putative joint employer:

  • Hires or fires the employee;
  • Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • Determines the employee’s rate and method of payment; and
  • Maintains the employee’s employment records.

The new rule makes clear that no single factor is dispositive in determining joint employer status, and the weight of each of the factors may vary based on the facts of each case.

Most notably, the new rule rejects the degree of “economic dependence” between the two putative joint employers and identifies additional factors which, standing alone, are insufficient to establish joint employer status:

  • Operating as a franchisor.
  • Maintenance of an employee’s employment records.
  • Unexercised ability to control an employee’s conditions of employment.
  • Contractual agreements related to compliance with legal obligations or standards.
  • Contractual requirements related to quality control standards.
  • Provision of a sample employee handbook.
  • Allowing an employer to operate a business on its premises.
  • Offering an association health plan or association retirement plan.

According to the DOL, “[t]o make joint-employer status more or less likely, the potential joint employer would have to not only provide such resources but would also have to somehow exercise control over the employees in relation to those resources.” In other words, a second employer must go beyond simply making resources available and must, instead, actually exercise control — directly or indirectly — over the various aspects of employment. For purposes of this rule, an employer exercises indirect control over an employee through mandatory directions to another employer that directly controls the employee. Merely reserving the right to control the employee’s working conditions or acting in a way that incidentally impacts the employee, however, does not indicate joint employer status.

The final rule provides a number of examples illustrating the application of the four-factor test to these and other business-to-business scenarios, intended to provide more practical guidance to employers with potential joint employment concerns.

Joint employers under the new DOL rule may be held jointly and severally liable for FLSA wage and hour obligations, including minimum wage or overtime. Joint employers may also be liable for violations of the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), Title VII and other employment discrimination laws, and workers compensation laws.

The NLRB’s Joint Employer Rule

The new rule above applies only to the DOL’s interpretation of the FLSA. As such, it does not address “joint employer” status under other federal employment laws, such as the National Labor Relations Act (NLRA).

Like the DOL, the National Labor Relations Board (NLRB) issued its final rule interpreting joint-employer status under the NLRA, which went into effect on April 27, 2020.

Under the final rule, a business will be deemed a joint employer only if it “shares and codetermines” one or more of the essential terms and conditions of employment of another employer’s employees. The essential terms subject to NLRB scrutiny include wages, benefits, work hours, hiring, discharge, supervision, and direction. In other words, an employer shares and codetermines such essential terms if it possesses and exercises substantial control over the employer’s employees such that the putative employer “meaningfully affects matters relating to the employment relationship with those employees.”

Importantly, evidence of indirect or contractually reserved control over essential employment terms and conditions may be a consideration for finding joint employer status, but is not, by itself, sufficient without further evidence of direct or immediate control over the employees in questions. The NLRB’s rule distinguishes between exercising indirect control and exerting control or influence over setting contractual objectives, expectations, or ground rules. The determination of whether an employer exercises indirect control over essential work terms or exerts control over conditions or expectations as to how a contract is to be performed “is an issue of fact to be determined on a case-by-case basis.”

Practically speaking, the NLRB’s joint-employer standard is significant to businesses because it determines whether a business: (1) has an obligation to bargain with labor unions representing workers employed by another entity; (2) is subject to union picketing or other labor dispute-related activities involving another entity’s employees; and (3) is jointly and severally liable for any unfair labor practices committed by another entity against its employees.

Shifting the Burden of Joint Employment Liability

While contract provisions regarding joint employment will not be determinative under either the DOL or NLRB rules, careful drafting can shift the costs of a joint employment determination. Construction companies acquiring labor from a third party, particularly staffing companies, should include contractual protections such as indemnification provisions, duty to defend clauses, and hold harmless clauses.

When drafted properly, these contract provisions would require the actual employer to defend the prospective joint employer against an adverse ruling on joint employment status and reimburse its costs in the event of a joint employment determination. Employers assessing their potential status as a joint employer should consult with counsel to ensure compliance with all applicable standards.

Summary

The final rules issued by the DOL and the NLRB effectively narrows the definition of “joint employer,” providing employers with much-needed clarity and encouraging greater uniformity in application.

It should be noted, however, that the new rules are not binding authority on the federal courts, nor do the new rules modify interpretations of joint employer status under state wage and hour laws.

For employers, particularly in those situations where an employee performs work for an employer and that work simultaneously benefits another employer, the new rules make it easier to comply with and understand the various obligations under the FLSA and the NLRA. Close adherence to the new rules, and making a conscious effort to mitigate potential liability, will certainly reduce compliance and litigation costs and give employers greater certainty in structuring their business relationships.

About the author: Keith A. Boyette is an attorney with Anderson Jones, PLLC. His practice areas include general civil litigation, commercial and construction litigation, lien and bond claims, and real property litigation. Questions about this article can be directed to him at KBoyette@andersonandjones.com.

Author’s note: This article is intended only for informational purposes and should not be construed as legal advice.

Nailing Down Talent: How To Successfully Hire Workers

Finding skilled workers is becoming more and more problematic for many roofing contractors. According to the 2019 Construction Outlook Survey released by the Associated General Contractors of America (AGC), more than three-quarters of respondents expected to hire more staff in 2019. However, 78 percent reported difficulties filling salaried and hourly craft positions and 42 percent believe that hiring personnel over the next year will continue to be hard.

The current labor shortage is drastically reducing the number of potential prospects. In the third-quarter 2019 Commercial Construction Index report from USG Corp. and the U.S. Chamber of Commerce, 61 percent of contractors said they’re struggling to find skilled workers. That number is up from 54 percent in the previous quarter, indicating the problem shows no signs of improvement.

The effect of the workforce shortage impacts your day-to-day operations through higher costs, longer completion times and higher bid prices. So how can you attract, hire and keep qualified workers in the current state of the industry? Consider these tips:

Market and Recruit

A well-written job listing will help attract the best employees. Talk directly to the type of person you want to hire, list the qualifications you seek, and explain what’s important to your business.

When writing the job description, be specific about the type of work your roofing business does so you can attract people who are skilled and comfortable in those areas. And if you’re willing to teach someone the necessary skills, be sure to mention that too.

Jim Johnson, head coach for ContractorCoachPRO, advises taking your listing a step further by creating a recruiting platform and making it part of your website.

“Have multiple job postings for everything you’re hiring for,” he says. “Include some videos with employee testimonials, your company culture and what you’re all about. And then market it. Market that website. Market it on Google, market it on social media, market it, market it, market it.”

“Really, truthfully, you’re a sales organization, you’re a marketing organization, you’re a contractor — you’re all those things,” he continues. “But in the big scheme of things, you’re a recruiting company. If you change your perspective that way and recruit great talent, all the rest is going to be easy. You’ll change the whole [methodology] of what you do as a contractor.”

Johnson says you should always be looking for talent as you’re walking around every single day — anytime, everywhere.

Look For Specific Characteristics

A good roofing employee should be able to do more than hammer nails and carry bundles of shingles. He or she should also have characteristics that can help your company stand out from the competition, including:

· Fast learner — You can train someone to carry out specific skills, but you can’t teach that person to be a better learner. New employees — even those with experience — should be willing to learn and adapt to the way you do business.

Tip: Ask potential workers about the most recent thing they’ve learned and have them explain how they learned it. Or have them explain some of the differences in the way previous employers did things and how they adapted to those expectations.

· Tech-savvy — Many roofing businesses use construction apps on the job. Your crew members should be able to pick up these new technologies.

Tip: Ask applicants what roofing apps they like and which features they find most useful.

· Professional – Employees need to put customers at ease. If someone isn’t courteous and professional on the job, he or she could cost you referrals and reap bad reviews. Your crew represents you and your brand. Hire roofers you can trust to leave a good impression on homeowners.

Tip: Ask candidates why they left their last job. They should avoid speaking negatively about their employer or co-workers. Or ask how they would respond if a customer was rude to them.

· Safety conscious — Roofing has one of the highest fatality rates of all industries. One person’s disregard for proper safety could put your whole crew at risk. Ask potential candidates plenty of questions to see how well they know best practices and only hire those who take safety seriously.

Tip: Have interviewees explain the precautions they take while on a jobsite or what they would do if a co-worker was acting in an unsafe manner.

· Positive attitude — Roofing is already hard work, so you don’t need a negative employee adding to the everyday stress. Antagonistic people can quickly crush crew morale, which could result in sloppy work, unprofessional behavior or even high turnover. Hire someone who can go with the flow and be a positive influence on fellow workers.

Tip: Listen. Did possible hires answer previous questions to your satisfaction? Did they seem professional and eager to work and learn your way of doing things? Overall, trust your gut. You’ll know who will fit in best with the rest of your crew.

Johnson cautions that you should never hire someone during an interview.

“Resumes — I personally think they’re garbage,” he explains. “They’re usually inaccurate and embellished. They’re very time consuming for me to get through and great candidates can be missed. The best salesperson I ever hired in my entire life was a Pizza Hut delivery guy. The guy sold $6.3 million in residential sales in 2017. He’s been in it for 19 years now. So, great candidates can be missed by just relying on resumes.”

Be Competitive

Once you’ve found the right person, you want him or her to accept the job. Salary is an important factor, of course. What are your competitors paying? Find out and, if you can, match or beat it.

Money isn’t everything, though. Most people also want a sense of job security. Explain why your company has a good reputation and how it can offer stability.

Talk about other things that make your company attractive, such as taking on unique projects, participating in philanthropic opportunities, or having an excellent benefits package.

And after you hire someone, do things that will make him or her want to stay. “No one does anything without incentive,” Johnson says. “And incentive is not necessarily money. Incentive can be a lot of different things. It can be a reward — a gift card, a trophy, all kinds of stuff. Or it could be plain old recognition.”

These types of incentives will remind employees that they’re valued and respected members of your team, which in turn increases their level of commitment and builds loyalty.

Help Educate Potential Hires About the Trades

As a contractor, you know the financial, leadership, and entrepreneurial benefits of working in the roofing industry.

Volunteer for speaking opportunities at local high schools to educate students about the value of pursuing a career in the field. Or participate in a trade show, such as the CareerExpo and SkillsUSA Championships hosted by the Construction Education Foundation of Georgia (CEFGA), which allows you to meet students interested in trade careers.

Some high schools and community colleges have apprenticeship or co-op work opportunities as part of their vocational training programs. Getting involved with these institutions gives you access to people who want to work in a trade and allows you to offer them real-world experience, which could result in a position with your company.

As budget cuts continue to reduce the size of the U.S. military, veterans must transition to civilian jobs. What these motivated men and women lack in roofing experience, they make up for with other valuable qualities, including trainability, discipline, reliability, and leadership skills. Many national organizations, such as the U.S. Department of Labor, have programs that help vets get the training and experience they need for their next career.

Invest in Your People

Countless surveys show that workers leave a job because they’re unhappy and don’t feel appreciated. To help with employee retention, invest in your people by providing continuous training.

The National Roofing Contractors Association (NRCA) offers a wealth of training opportunities. Through the organization’s ProCertification program, workers who demonstrate substantial knowledge and skills can earn certifications in specific roof system installations.

“In the past, a roofing company would go to a job fair in their local community and try to present a career in the industry as one that’s truly professional,” explains Reid Ribble, CEO of the NRCA. “However, there was no way for [a trade worker] to become a master roofer. They could become a master plumber, master electrician or master carpenter, but there was really no professional certification for them to reach that same status in the roofing industry.”

By the end of 2019, the NRCA’s ProCertification program will have certifications available in six disciplines. Eventually, it will offer a total of 18.

“If roofing workers stack enough of these certifications on top of each other, they can achieve master status, as a master low-slope roofer, master steep-slope roofer, master service technician, or master solar technician,” Ribble says. “That’s a powerful tool that we didn’t have before to recruit workers. It’s a long-term, transformational shift away from making the roofing companies the primary to making the working roofer the primary. And that’s a big shift, but it’s the one that actually provides the quality assurance that customers need.”

The NRCA is taking stepsto get the ProCertification program recognized nationally. However, Ribble cautions that this push will not affect the licensing of roofing companies.

“We believe that, as a national association, it’s up to our state affiliates to make the determination locally as to whether or not they want a licensing program,” he says. “Some states do, other states do not. Some of our members do, other members do not. We don’t want to have a restrictive approach to people entering the roofing trade. But what we can do is create standards for roofing workers. Because, let’s face it, putting on an asphalt shingle roof in Georgia is no different than putting an asphalt shingle roof on in Wisconsin. You might treat the underlayment at the eaves different because of snow and ice, but for the most part, that roof goes on the same.”

The Bottom Line

Hiring workers is one challenge. Keeping them is another. So, while following one or more of these tips can help you build your business, you must also create an environment where your employees feel valued. After all, they determine the success of your jobs, which means your company’s reputation is only as good as the people you hire.

As Doug Conant, CEO of Campbell’s Soup, once put it, “To win in the marketplace, you must first win in the workplace.”

About the author: Tiara Searcy is the content and digital marketing manager for Atlas Roofing. For more information, visit www.atlasroofing.com.

Bringing on Large Clients Can Result in Big Problems

So many salespeople and small business owners strive to hook the big fish — the large client. There’s a belief that these are the best customers and that there is validity and credibility attached to being able to say you’ve won those accounts.

I see it a little differently. When I think about hooking the big fish I think about long sales cycles, low quotes with tight margins, and diversion of attention. Let’s take a look at each.

1. Long Sales Cycles

Large clients often make decisions slowly. They have more people involved in the decision-making process and they have more priorities. I’ve seen a lot of salespeople struggle with the inability to move a sale forward. The reality is that larger clients have so many priorities that they may not feel any urgency for what you have to sell. Competing priorities go on all day, every day inside large companies. We can’t expect them to maintain interest in our product or service just because we’ve had a meeting with them. We have to continue to be persistent and patient — all at the same time.

Because these sales cycles are longer we have to also make sure we are pursuing smaller clients at the same time. We have to make sales and bring clients in while we continue to troll for the big catch. It can be challenging to juggle all of that activity. A lot of salespeople have a tendency to tread water while waiting for the big fish to bite. It’s pretty tough to make your quota or your sales goals that way.

2. Low Quotes With Tight Margins

Large companies are accustomed to negotiating price — in their favor. If we aren’t careful we’ll end up pricing too low to make the account worthwhile. We have to seriously consider the ROI of winning the big account. If the price is too low and the margins too tight, we’ll find it tough to grow. We need healthy margins to have money to invest in our business. And to be there for the unexpected.

Moreover, large clients typically aren’t loyal. They consistently shop their vendors to make sure they are getting the best for the lowest cost. What would happen to your company if your big fish left for a cheaper alternative? All that revenue gone. All that time spent working for them instead of building a client base. Dangerous. Unfortunately, this happens all too often. A company focuses on getting a large account, does all of the work to onboard them, allots resources to manage the account, and has very little left over for anything else. Then one day the client leaves. That company is now in danger of going under. They are suddenly top-heavy with expenses and devoid of revenues.

Once again it can seem like a major win to land that big fish. However, what may seem like a coup can turn into a nightmare if the revenue isn’t worth the effort. Consider the alternative. Instead of seeking large clients, what if you pursued and gained a significant number of small and medium-size customers? The margins would probably be relatively good, the relationship would probably be good, and the loyalty would most likely be there. If by chance a customer left it wouldn’t derail your company. The loss would be easy to absorb until you could replace it. And it wouldn’t be so difficult to replace.

3. Diversion of Attention

Large clients require and demand a lot of attention. We tend to favor them and understand that we have to consistently nurture them. These clients expect to be taken care of. They expect the VIP treatment. And because we were so focused on getting the business we fall into the same belief system once we’ve snagged them. We have to give them a lot of attention in order to keep them.

So, we commit resources to them. These are resources we could be using to bring in more medium and small clients. We could be building a foundation of loyal, well priced, evenly handled clients. We could be growing, and committing our resources in ways that would benefit our company more than having that big fish.

In addition, needing to assign a lot of resources to a large customer means that there is the possibility your other customers will receive less than stellar service. Now you run the risk of losing your other customers — the foundation or cushion — because they are being ignored.

Step back and consider what you want for your company. I’m imagining its healthy growth with loyal clients who respect and appreciate what you do for them; it’s reasonable margins and a deep bench of clients. If that’s the goal, and I hope it is, you should focus on adding a significant number of medium-size clients. Let someone else grapple with the behemoth. It may sound like success to hook the big fish. In reality, success is serving many clients and having the time and money to continue to serve them all well.

About the author: Diane Helbig is a leadership and business development advisor helping business owners around the world. She is the author of Lemonade Stand Selling, Expert Insights, and Succeed Without ‘Selling,’ as well as the host of the “Accelerate Your Business Growth” podcast. For more information, visit www.seizethisday.co.

How To Create Advocates — Not Adversaries

Everyone we come in contact with can either help us achieve our goals, or create obstacles. The outcome is dependent on how we engage with them. When we are looking to grow our business, we interact with many people in many different roles. How we see them informs how we choose to deal with them. If we are wrong, we can hurt our growth.

Everyone we meet is not a prospect. There, I said it. Moreover, it is really dangerous to assume that everyone is a potential customer. When we believe that everyone we encounter is a possible client, we approach them from that direction. We decide our communication structure based on that belief. The problem with this belief is that most of the people we meet are not potential customers. So, we are instantly alienating people instead of attracting them.

The truth is that no one likes being treated like a “kill.” We are better off not even thinking about our business when we interact with people. That way we are more interested in finding out who they are than we are in telling them about our product or service. It is that curiosity that will help us build relationships.

Consider it this way — throughout our travels we will meet all sorts of people. Some will be colleagues. Others will be referral sources and resources for our connections. Others still will be conduits to our prospective clients. And, of course, some will become clients. That array of possibilities speaks to the value of leading with curiosity and respect.

The more advocates we have in our business, the easier it will be to grow. When you call to speak with a prospect or stop by to see a prospect, everyone you encounter can either help you or hurt you. The gatekeeper can be one of your greatest supporters or they can keep you from getting in to see the prospect. The receptionist can patch you through or keep you out.

The people you meet at networking events can become great resources for you and your business or they can simply be people you meet. The beauty is that you get to choose the result because you choose how you interact.

Let’s break it down.

Networking

When you are networking, you can choose how you approach people. When you decide to be curious about the people you meet you are out of sales brain. That’s good! Being curious allows you to be fully present. You will be listening and learning. You will be determining who you want to continue to build relationships with. And you will be someone other people want to get to know.

What you won’t be doing is selling. You won’t be telling other people about your product or service. You won’t be trying to gain a client. And, you won’t be disregarding people you think aren’t prospective clients.

When you attend networking events looking for clients, you dismiss anyone you think doesn’t look like a prospective client. And when you do that, you miss out on discovering resources and referral partners. It’s a very shortsighted strategy. Remember, you need a variety of connections in your business community in order to be successful.

Prospecting

When you reach out to a person or company to make a connection you are probably not going to speak with the decision maker first. Most likely you will have to go through a receptionist, assistant, or connection. How you interact with them will have a direct impact on your ability to get to the right person.

Their job is to ensure the people they support are not interrupted unnecessarily. You aren’t the only person seeking a conversation. If the gatekeeper let everyone in, the decision maker would never get anything done.

Decide to engage with the initial contact with respect for their responsibilities and workload. Too often salespeople take this blocking personally. However, it has nothing to do with the salesperson. It has to do with the responsibilities the receptionist/assistant/connection has in their role. When salespeople realize they can actually help these folks become allies and advocates, the whole conversation changes. You need that gatekeeper in your corner. So, figure out how you can first be in their corner. How can you help them? Stop seeing them as an adversary. Take the time to build a relationship with them. That’s how you will gain access to the decision maker.

Elsewhere

Wherever you go you are building a reputation. It’s your decision whether that reputation is good or bad. Whenever you interact with people they are creating a view of you and your company. They are deciding whether you are someone they want in their world or not. Realizing you need as many advocates as possible can help you decide how you will interact with everyone. Build the best reputation you can. That reputation should be one of problem solver, helper, giver. The more you show up as someone who is more interested in helping others than in gaining business, the more attractive you will be. And the more business you will gain.

Everyone is not a potential client. Potential clients are not the only people worth speaking to. Other people can directly impact your ability to grow your business. Remembering these things will help frame how you engage as you venture out on your business building journey. Seek to gain advocates. It’s the best way to avoid gaining adversaries.

About the author: Diane Helbig is a leadership and business development advisor helping business owners around the world. She is the author of Lemonade Stand Selling, Expert Insights, and Succeed Without ‘Selling,’ as well as the host of the “Accelerate Your Business Growth” podcast. For more information, visit www.seizethisday.co.

How to Prepare Your Company for an Immigration and Customs Enforcement Audit

Although President Trump’s attempts to pass sweeping immigration reform have been largely unsuccessful, since his inauguration there has been a sharp increase in enforcement of current immigration policies in the workplace. One such policy is that employers verify that all employees are authorized to work in the United States. Since 1986, the Immigration Reform and Control Act (IRCA) requires employers to verify work authorization by reviewing each employee’s identification documents and completing (and retaining) Employment Eligibility Verification Forms (Forms I-9).

Enforcement of IRCA is largely accomplished through the initiation of I-9 audits conducted by Immigration and Customs Enforcement (ICE), an agency within the Department of Homeland Security (DHS). According to the National Law Review, in 2018, the number of audits conducted increased by more than 400 percent, from 1,360 in 2017 to 5,981 in 2018.

What Is an ICE Audit?

During an ICE audit, ICE officials are legally permitted to examine Forms I-9 for compliance and determination of fines or other criminal penalties for violations. ICE audits may be initiated based on tips from various sources, but companies are also subject to being randomly selected from a national database of employers.

In most circumstances, an ICE audit begins when an ICE agent arrives at the workplace and delivers a Notice of Inspection (NOI). Upon receipt of a NOI, the company is provided with three days to respond. In some circumstances, with good reason, an extension to respond may be granted. After the three-day period, or any extension, the employer is required to produce for inspection Forms I-9 for all active employees and any employees terminated within the retention period. (Forms I-9 must be retained for certain periods even after an employee is terminated or leaves a position.) ICE officials may arrive on site to conduct an inspection or investigation. While on site, ICE officials cannot enter non-public areas of a building or speak with employees on the premises unless the officers have a warrant or the employer’s consent, unless certain circumstances exist to permit further investigation without a warrant, subpoena, or the employer’s consent.

Preparing for an Audit

The key to preparing for a potential ICE audit is to be proactive. One of the most effective ways for an employer to prepare for an ICE audit is to conduct an independent self-audit to ensure they are in order and in compliance with all requirements. An employer may choose to perform the internal audit or hire counsel to do so. Hiring independent counsel that specializes in this area of the law to perform the audit provides the employer with several benefits. Counsel can walk the employer through the audit process, determine any deficiencies that exist, and prevent the possibility of any deficiencies being covered up by staff members or other employees. Performing self-audits not only gives employers an opportunity to identify errors, omissions, or other deficiencies, but is also evidence of a good faith effort on the part of the employer to make all reasonable efforts to comply with the requirements.

Employers should prepare to take immediate action to correct any deficiencies a self-audit reveals. Forms I-9 should never be backdated, as that evidences an attempt to willfully and intentionally deceive government officials. Deficiencies should be corrected in a conspicuous manner. Use a different color ink to indicate a correction and have the person making the correction initial it. In addition, the internal audit process should be adequately documented. For example, attach a memorandum to the deficient Form I-9 identifying the deficiency discovered and the steps taken by the employer to correct it.

In addition to performing an internal self-audit, employers should always review or establish sound policies and procedures for completing Forms I-9 and maintaining adequate records. Employers should always exercise due diligence when making employment decisions to ensure that each employee is compliant.

Here are a few quick methods to avoid or reduce exposure:

  • Ensure that there is a Form I-9 on file for every active employee.
  • Ensure all reverifications are completed where an employee’s work authorization has expired and form a schedule for ensuring that reverification is completed timely.
  • Maintain copies of identity and work eligibility documents.

In any event, hiring independent legal counsel will prepare employers for any potential ICE audits and provide employers with an additional layer of protection should the employer receive a NOI. Introducing a systematic approach to records maintenance will make it simpler for internal audits and shield employers from the significant penalties IRCA imposes. Technical violations, those which are inadvertent or procedural, can carry fines between $230 to $2,292 for first-time violators. Fines for knowingly hiring, employing, or continuing to employ unauthorized workers are between $573 to $6,878 for first-time violators and can reach up to $20,130 for the third (or later) violation. In addition to civil penalties imposed for failing to comply with the provisions of IRCA, employers should be aware of potential criminal liability if ICE determines that the employer engaged in a pattern of hiring or recruiting undocumented workers.

Impact on the Construction Industry

In the midst of a nationwide shortage of skilled workers, many contractors are struggling to adhere to federal hiring requirements, exposing many employers to civil fines and criminal charges which would ultimately challenge their ability to survive.

It is important to note that both general contractors and subcontractors bear the same responsibilities when it comes to maintaining Forms I-9 documentation. General contractors should be further aware that they could be held responsible if a subcontractor fails to meet all requirements. Ultimately, liability depends on knowledge. If a general contractor or even a large subcontractor is aware that a lower-tier subcontractor is employing undocumented workers, they can be held liable as well. To prevent any issues regarding knowledge, contractors should always make proper inquiries into hiring and employment practices of subcontractors.

As previously discussed, it is critical that each employer implement and enforce sound employment and employee documentation policies to ensure compliance with all federal requirements. Hiring independent legal counsel can assist with identifying and rectifying any deficiencies which an employer is not even aware exist. Getting out in front of deficiencies is critical to avoid civil or criminal liability should an ICE official come knocking on the door.

About the author: Lindsey E. Powell is an attorney with Anderson Jones, PLLC practicing in North Carolina and Georgia. Questions about this article can be directed to her at lpowell@andersonandjones.com. Author credit is also given to Keith A. Boyette, attorney with Anderson Jones, PLLC who may be reached at kboyette@andersonandjones.com.

Author’s note: This article is intended only for informational purposes and should not be construed as legal advice.

State Sales Taxes Create Administrative Challenges for Contractors

As most of us know, taxes are among the few certainties we can expect in life.

And a look at state laws nationwide indicates that sales and use taxes in particular are having a moment, especially laws imposing sales tax on certain types of real property improvements and services. According to a 2015 publication by tax software provider Avalara, at least 18 states impose a sales tax on at least some services that are considered improvements to real property. These states include Connecticut, Florida, Hawaii, Iowa, Maryland, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Texas, and Wisconsin. States appear to be trending toward collecting sales taxes from end customers on materials, labor, repairs, and services associated with real property improvements.

The impact is not only an increase in construction costs for consumers, but will also push contractors to overcome administrative challenges and to keep their prices competitive in spite of additional tax costs they must impose on customers. As discussed below, this is especially true for contractors who do both taxable and non-taxable improvements. Anyone unsure of how their state’s law applies to their activities should consult with a CPA, tax attorney, or their state’s department of revenue.

What Services Are Taxable in my State?

Generally, most states have long imposed a sales tax on purchases of goods both on consumers and on businesses. The growing trend appears to be that some states are also imposing sales tax on certain services that may or may not be related to taxable goods. In at least a few states, the distinction between capital improvement projects and repair, installation and/or maintenance work is important. Often, contractors who perform work in both categories — work subject to sales tax and work that isn’t — can submit some type of affidavit or other paperwork in order to be excused from sales tax liability or from the responsibility to pass it to others. However, in many cases, the distinctions between taxable and non-taxable services is highly technical and can depend on the circumstances of the transaction in question.

In Florida, the distinction between “tangible personal property” and “real property” determines when contractors must charge sales tax to the end customer. Under the Florida Department of Revenue Rule 12A-1.006, if contractors furnish parts directly to customers, they must charge sales tax to customers both for the parts and for “adjusting, applying, installing, maintaining, remodeling, or repairing” tangible personal property. Section 192.001(11)(d) of the Florida statutes defines tangible personal property as “goods, chattels, and other articles of value … capable of manual possession and whose chief value is intrinsic to the article itself.” The statute defines “real property” to include “land, buildings, fixtures, and all other improvements to land.” Contractors performing labor to install permanent fixtures that constitute “real property” do not have to charge sales tax to their customers; contractors who will eventually charge their customers sales tax are entitled to purchase the materials as tax-exempt.

A Florida Department of Revenue online guide cites permanent carpeting, roofing, tile, and landscaping as example of “real property” improvements that are not subject to sales tax. However, the same guide states that “carpet” constitutes tangible personal property unless it becomes real property; this provision seems potentially confusing and likely requires flooring contractors to impose sales tax on some of their services but not others. Similarly, the guide states that “stepping stones” constitute tangible personal property; it would therefore seem that landscaping contractors are tasked with taxing some of their services but not others, as the guide generally lists landscaping work as a “real property” improvement.

In Ohio, contractors need to understand the legal distinction between “construction contracts,” which are not subject to customer sales tax, and “tangible personal property” contracts, which are. According to the Ohio Department of Revenue, tangible personal property becomes real property when it is permanently installed or affixed upon the real property pursuant to a construction contract. The Department specifically lists carpet, carpeting materials, and landscaping materials as tangible personal property. The Department advises that for transactions that are not construction contracts and that include the sale of tangible personal property (TPP) for sales tax purposes, contractors should present their vendors with a direct pay permit that will allow them to buy the materials tax free, charge customers sales tax, and then pay the sales tax to the state on a monthly basis.

New York and North Carolina require contractors and other service providers to charge customers sales taxes on the sales price of “repair, installation, and maintenance” work (commonly referred to as RIM), whereas “capital improvements” are not subject to sales tax. The New York Department of Taxation and Finance’s Publication 862 purports to give guidance to contractors and property owners on New York’s sales tax rules. It explains that “repair” and “maintenance” work — work done to keep real property in good working order, safe, or to restore it to a good and safe condition — is subject to sales tax. Publication 862 cites replacing damaged roof shingles, repairing a broken railing, and replacing a faucet as examples of RIM services that, along with the materials, are subject to sales tax. It goes on to discuss taxable installation services and provides that “freestanding appliances” like washing machines, dryers, dishwashers, and refrigerators are among items that, although installed, do not become a permanent part of the real property under New York law.

North Carolina law similarly sets forth particular activities that constitute RIM services — like “floor refinishing and the installation of carpet, flooring, floor coverings, windows, doors, cabinets, countertops, and other installations where the item being installed may replace a similar existing item … .” The repair or replacement of roofing, gutters, and flashing appears to fall squarely within North Carolina’s definition of RIM services for which contractors must charge their customers sales tax. North Carolina’s law — N.C. Gen. Stat. § 105-164.3(33l) — goes on to say that RIM services that are part of a real property contracts for capital improvements are exempt from the sales tax.

“Capital improvements,” on the other hand, are not subject to sales tax in New York and North Carolina. In New York, whether a project constitutes capital improvement work appears to depend heavily on the particular circumstances; even the method of installation can affect how the work is taxed. For example, some projects that ordinarily would qualify as capital improvements are not considered capital improvements if a commercial tenant installs items as trade fixtures. Whether they are taxable depends on whether the intent is for the improvements to remain permanent. In North Carolina, capital improvements include new construction; work that requires a permit (with some exceptions); installation of equipment or fixtures that is “capitalized and depreciated”; paint or wallpaper not incidental to RIM services; landscaping; and HVAC unit or system installation or replacement.

How Is the Industry Being Impacted?

For many contractors performing RIM or other sales taxable work in one or more of these states, distinguishing which services are and aren’t subject to sales tax is only the first step. Contractors also need to comply with the requirements and, when applicable, take the administrative measures needed in order to avoid what is effectively double payment. When contractors buy goods and materials from wholesalers, they are generally responsible for paying sales tax at that time. Typically, though, the states that impose sales tax on RIM or other similar services don’t require contractors to pay sales tax on materials that will be used in transactions where the end customer will have to pay sales tax. In many states, including North Carolina and Ohio, contractors can submit a form E-595E and potentially be exempt from paying sales tax on goods they will eventually resell and assess taxes upon. But for those contractors who buy goods and materials to be used both for RIM and capital improvements — for example, roofers who perform both new construction and repair work in North Carolina — the logistics of keeping the purchases separate (and keeping two sets of books, essentially) might be too administratively costly to justify the tax savings.

Mike Tenoever is the president and owner of The Century Slate Company, a roofing construction company in Durham, North Carolina, and he also is a member of the Roofing Editorial Board. Tenoever stated that even though the new sales and use tax laws took effect in North Carolina in 2016, some general contractors don’t seem familiar with North Carolina’s affidavit of capital improvement form when he submits it — something that indicates that not everyone is complying with or aware of the new law yet. If that’s the case, then it would appear that contractors who aren’t complying with the law and charging sales tax to end customers would be gaining a competitive edge over contractors who are following the law and charging sales tax on projects that constitute RIM under N.C. Gen. Stat. § 105-164.3(33l).

Furthermore, requiring contractors to determine what materials and supplies for which they should pay sales tax versus for which ones to tax customers is burdensome and, at least in Tenoever’s case, has effectively resulted in double tax payment because purchasing capital-improvement materials and RIM materials separately from the same vendors has been too administratively burdensome for his company.

About the author: Caroline Trautman is an attorney with Oak City Law, LLP, based in Durham, North Carolina. Questions about this article can be directed to her at caroline@oakcitylaw.com.

Author’s note: This article does not constitute, and should not be construed as, legal advice on any particular scenario. For specific advice, consult with an attorney licensed in your state.

Mediation, Litigation, and Arbitration … Oh My!

It’s a rare situation in this day and age that a construction contract or subcontract does not contain a dispute resolution clause, particularly the industry form contracts (such as the AIA, ConsensusDocs, and EJCDC). A contract may prescribe mediation, arbitration, or a combination of mediation and litigation or mediation and arbitration. Because parties are free to draft their own contracts, such provisions are generally enforceable. But what does all of it mean?

Mediation

First, mediation, though understood as a form of alternate dispute resolution, does not provide an ultimate decision maker. Rather, mediation is a settlement conference wherein the parties engage a neutral third party, the mediator, and meet (often in person) to present their respective cases. The mediator typically hears presentations regarding the facts of the case and assists the parties in understanding each side’s position and respective strengths and weaknesses to facilitate settlement. The mediator’s fee, generally calculated on an hourly basis, is split evenly between the parties (absent an agreement to the contrary). Importantly, the mediator has no authority to decide the case or compel a settlement or any particular outcome. In that sense, mediation only resolves the dispute if everyone voluntarily agrees to a settlement. That is why dispute resolution provisions sometimes use a combination of mediation and either arbitration or litigation to achieve a final resolution. If a voluntary settlement is not reached at mediation, an impasse results, and the parties should proceed as required by the contract.

Litigation

Litigation is initiated by the filing of a complaint in the appropriate jurisdiction and venue (which may be governed by the dispute resolution provision or other provisions in the contract). The parties are usually entitled to bring in additional parties who may be needed for a complete resolution of the issues. The litigation will proceed through a process of discovery, wherein parties exchange information and documentation related to the dispute, following strict rules of civil procedure and evidence. Eventually, a lawsuit will be tried either to a judge or jury who will render a verdict, which is reduced to an order or judgment. Any party that is unhappy with a verdict typically has the right of appeal.

Be advised that engaging in litigation doesn’t always mean that you won’t encounter alternative dispute resolution. For instance, North Carolina statutorily requires that all Civil Superior Court cases (typically involving actions for damages exceeding $25,000) be ordered to mediation before trial. Also, most Federal District Courts require parties to consider mediation or refer, and sometimes order, cases to mediation.

Arbitration

Arbitration is similar to a lawsuit but does not involve the court. Most dispute resolution provisions will designate a third-party association — often the American Arbitration Association (AAA) or JAMS — to act as the administrator of the arbitration. Arbitration is generally initiated with a demand by one party, after which an administrator is assigned to facilitate the process. Parties typically choose the arbitrator (or a panel of arbitrators) from a list provided by the administrator based on the subject matter of the dispute. Construction arbitrators are typically construction lawyers or other professionals with extensive experience in construction. The rules of evidence and procedure are relaxed in arbitration allowing the parties, with the assistance of the arbitrator and the administrator, to create their own scheduling, deadlines, procedures and rules for discovery and motions. Eventually, the dispute will be heard by the arbitrator(s), and there is no right to a jury. The arbitrator(s) will render an award which is only appealable in limited, and extraordinary, circumstances such as fraud or bias.

Arbitration is intended to be more efficient and inexpensive than litigation, but that’s not always the case. First, using a third-party administrator (AAA or JAMS) typically involves significantly higher filing fees than courts. Arbitration filing fees are determined on a sliding scale depending on the amount sought in the demand for arbitration. Also, unlike litigation, the parties must compensate the arbitrator(s) for the time spent in arbitration on an hourly basis. Because construction arbitrators are highly experienced construction professionals, their hourly rates are commensurate with those of construction attorneys.

Because arbitration is the product of an agreement to submit disputes to arbitration, only parties who are subject to an agreement to arbitrate (either the dispute resolution provision in a contract or a separate agreement) may be compelled to arbitrate. This can sometimes make arbitration inefficient. For instance, where a general contractor initiates arbitration against a roofing contractor, the roofing contractor may attribute the actual cause of the dispute to a lower-tier subcontractor or supplier. However, if that lower-tier subcontractor or supplier is not subject to an agreement to arbitrate, there is no mechanism whereby it can be compelled to join in the arbitration proceeding, whereas in litigation, it could usually be joined as a party. In that case, the roofing contractor may be forced to defend against the general contractor in arbitration and simultaneously prosecute a separate action against the lower-tier subcontractor or supplier, resulting in both increased costs and duplicated efforts.

Weighing the Advantages

Each method of dispute resolution has its advantages and disadvantages. Acknowledging the differences in the methods of alternative dispute resolution allows the parties to craft a procedure that’s right for them. Even if the contract is silent as to dispute resolution, the parties (with unanimous agreement) can submit their disputes to mediation or arbitration.

Other contract provisions that are particularly relevant to dispute resolution include choice of law and forum selection clauses. Choice of law clauses provide that a particular state’s laws will control dispute resolution, regardless of where the project is located or the proceedings will be held. Forum selection clauses prescribe the location of the dispute resolution proceeding.

Understanding the dispute resolution provision(s) in your contract and the law and procedures which will apply is critical. Engage legal counsel during contract drafting or review and negotiation to ensure the dispute resolution clause is appropriate and effective. Remember, an ounce of prevention is worth a pound of cure.

About the author: Lindsey E. Powell is an attorney with Anderson Jones, PLLC practicing in North Carolina and Georgia. Questions about this article can be directed to her at lpowell@andersonandjones.com.

Author’s note: This article is intended only for informational purposes and should not be construed as legal advice.