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Contractors, it’s time to put that house in order

By Darien Loiselle

What a difference a year makes. Invitations to bid are flying. Estimators are in short supply. The phones are ringing, and backlogs are sizes we have not seen since fall 2008.

We construction lawyers are happy again, too, because we are doing deals rather than presiding over distressed projects. While we are by no means out of the woods, there definitely is a spring in the industry’s stride, and it looks like this summer will be the best one in five years.

And while there are more opportunities to pursue, contractors should be mindful that many rules of the game have changed — adding workers can have unintended consequences. Now is the time to get the house in order, and to set the table to seize the opportunities coming in a healthy and less risky way.

Health care reform is at the front and center of many small and medium employers’ minds. Now that the Affordable Care Act is law, both the feds and the state regulators are tackling the difficult chore of implementing this confusing area of the law.

Given that health care administrators and professionals are being challenged to understand how the new law will be implemented, it practically is impossible for many new and “emerging” contractors to understand this technically challenging environment, and more importantly, secure affordable coverage at the most competitive rates. What is clear under the new law is that those employers who already qualify as a “large group” will have more flexibility and opportunity (and likewise a competitive advantage).

With the costs of health care becoming a serious part of the overall labor cost, those who are small or “emerging” might be at a distinct competitive disadvantage. The good news is that certain trade organizations are addressing their health care plans, and might be in a position to qualify as bona fide plans and provide similarly attractive rates to its members.

Now is an excellent time for contractors who never have been part of a trade association (or dropped their association membership because of cost during the recession) to reconsider their membership status.

Employers naturally will be adding employees to their operations. Small business owners should be aware that many laws and regulations impose requirements on employers.

Employers would be wise to review their employment manuals and employment agreements with qualified professionals to ensure that obligations are being met and opportunities are being protected. It is not wise to pull that prerecession employment manual off the shelf and assume that it is in tune with current law.

And hopefully, most contractors are dusting off their old portfolio of construction contracts. The financing, bonding and insurance environments all have changed radically. New case law has modified the breadth and scope of indemnity and contribution rights.

Owners who have not performed a legal audit of their forms in some time should do so now, before the cascade of projects overwhelm their contracting staff (and their attorney).

And most importantly, let’s not forget many of the lessons learned since the last downturn. Growing too fast and taking work outside typical competencies is risky, and many contractors grew too fast to keep up with their administrative requirements. Don’t be afraid to consult with insurance, bonding and legal professionals who were in the unfortunate position of cleaning up some of these wrecks. Use these improving conditions to build a strong and sustainable move forward.

Darien Loiselle is a construction attorney in Portland, Ore.

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