ConstructionTradeContractors

The appropriate classification of employees is a frequent source of confusion for design firms, usually coming up around the renewal of a firm’s Workers’ Compensation policy. It is an issue ripe with risk on an Employment Practices level. Recent court rulings in Arizona and Utah have resulted in construction firms paying hundreds of thousands of dollars in back wages, damages, and penalties.

As explained on the Schinnerer Risk Management Blog:

In an age of rising benefit costs and other constraints on the operations of professional service firms, some firms are turning to a range of tactics to reclassify workers to take them off the formal payroll and, therefore, lower their costs and administrative burdens. However, doing so may subject the employer to state and federal employment law fines and penalties.

All this is happening against the backdrop of a broader shifting of risk from employers to workers, who are shouldering an increasing share of responsibility for everything from health insurance premiums to retirement income to job security. While the future might present a model where everyone is truly an independent contractor and neither those actually providing services nor those using the services have any continuing or controlling interest in each other, such a situation does not currently exist and any firm that thinks it can avoid employment responsibilities, tax obligations, or employment practices liability needs to carefully consider alternatives to hiring workers.

Regulators and courts have increased their scrutiny of the relationship between business entities and independent contractors. Alleged misclassification of workers has been one of the primary battlegrounds of this shift, leading to high-profile lawsuits.

For decades, some professional service firms have shifted work from employees to independent contractors to cut their overhead and labor costs and, at times, to qualify for special government procurement assistance. Often, this has been accomplished by relabeling workers and slightly altering the conditions of their work. And some professional service firms have simply ignored regulatory and tax guidance and “informally” used the services of professionals and clerical workers as “consultants” or “leased personnel” or “temps.”

Now, however, businesses—including design firms and construction contractors—are turning to other kinds of employment relationships, such as setting up workers as owners of limited liability companies (LLCs) in an attempt to shield the businesses from tax and labor statutes. In response, some state and federal agencies are aggressively clamping down on such arrangements, passing local legislation, filing briefs in workers’ own lawsuits, and closely tracking the spread of what they see as questionable employment models.

Visit the Schinnerer Risk Management Blog to continue reading.

If you have questions about the appropriate classification of your employees prior to your next workers’ compensation renewal, contact your local a/e ProNet broker. We’re happy to help!

drugs_alcohol

Compared with many other industries, the Engineering and Architecture community has a relatively low abuse/dependence rate (7.9%) on any substance, and alcohol is the substance these design professionals are most likely to be dependent upon. This is according to a 2010/2011 national survey completed by the Substance Abuse and Mental Health Services Administration.

“Coping with substance abuse and dependence is a big enough challenge on its own, but balancing both an addiction and a career can pose an even bigger struggle. The impact of drug abuse on workplaces is astronomical, costing the United States $120 billion in lost productivity in 20071. Alcohol abuse is similarly widespread, with 15% of American workers reporting being impaired by alcohol while at work at least once during the previous year2. And the effect on safety can be potentially catastrophic: Employees involved in accidents were more than four times as likely to test positive for opiates3. So what are the patterns of substance use across America’s industries?” — Treatment4Addiction.com

You can visit the Treatment4Addiction website for analysis and presentation of the survey data. As you’ll see, while Design Professionals rank mercifully low on this list, Construction Trades & Extraction Workers rank unfortunately high (17.4%), with “heroin as their most disproportionately used substance. Their widespread abuse of a powerful opiate may reflect the prevalence of chronic back pain and untreated injuries in the field.”