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​On September 13, 2017, the California State Legislators passed a bill that would make developers and general contractors responsible for subcontractors who fail to pay their employees even though they already paid the subcontractors for the work. Assembly Bill 1701 (AB 1701), sponsored by unions who represent carpenters and other building trades, would require general contractors to “assume, and [be] liable for . . . unpaid wage, fringe or other benefit payment or contribution, including interest owed,” which subcontractors owe their employees. Despite vehement opposition from the California Building Industry Association and the Associated General Contractors of California, this bill has been submitted to the Governor and is expected to be signed into law.
NEW REQUIREMENTS
Once signed, this bill would impose the following requirements under Labor Code section 218.7:
• Applies to All Private Works Contracts That Are Entered Starting January 1, 2018.
For private works contracts entered on or after January 1, 2018, a “direct contractor” (i.e., prime contractor or contractor who has direct contractual relationship with an owner) must assume and be liable for any debt which its subcontractor or a lower tier subcontractor incurs “for [a] wage claimant’s performance of labor included in the subject of the contract between the direct contractor and the owner.” (Lab. Code, § 218.7, subds. (a)(1) and (e).)
• The Labor Commissioner and Joint Labor-Management Cooperation Committees May Bring Action to Recover Unpaid Wages on Behalf of Wage Claimants.
The California Labor Commissioner and joint Labor-Management Cooperation Committees established under the federal Labor Management Cooperation Act of 1978 (29 U.S.C. § 175a) (typically comprised of labor unions and management) may bring a civil action against the direct contractor for unpaid wages owed to a wage claimant. (Lab. Code, § 218.7, subds. (b)(1) and (3).) The Labor Commissioner may also bring its claims through administrative hearings (Labor Code section 98) or by citations (Labor Code section 1197.1). (Lab. Code, § 218.7, subd. (b)(1).)
• Third Parties That Are Owed Fringe or Other Benefit Payments or Contribution on Behalf of Wage Claimants (Labor Unions) May Bring Action.
Third parties who are owed fringe or other benefit payments or contributions on a wage claimant’s behalf (e.g., labor unions) may bring a civil action against the direct contractor for such unpaid benefit payments or contributions. (Lab. Code, § 218.7, subd. (b)(2).)• It Does Not Confer Wage Claimants With Any Right to Sue Direct Contractors.
AB 1701 gives the Labor Commissioner, Labor-Management Cooperation Committees and the unions standing to bring an action against the direct contractor, but it does not confer any private right of action by the wage claimants against the direct contractor.
• Labor-Management Cooperation Committees and Labor Unions Shall Recover as Prevailing Plaintiffs Their Attorneys’ Fees and Costs, Including Expert Fees.
For actions brought by Labor-Management Cooperation Committees or labor unions, “[t]he court shall award a prevailing plaintiff in such an action its reasonable attorney’s fees and costs, including expert witness fees.” (Lab. Code, § 218.7, subds. (b)(2)-(3).)
• Direct Contractor’s Property May Be Attached to Pay for Judgment.
AB 1701 authorizes the attachment of direct contractor’s property to pay for any judgment that is entered pursuant to this section. (Lab. Code, § 218.7, subd. (c).)
• One-Year Statute of Limitation to Bring Action under This Section.
Actions brought pursuant to this section must be filed within one year of the earliest of: (1) recordation of a notice of completion of the direct contract; (2) recordation of a notice of cessation of the work covered by direct contract; or (3) actual completion of work covered by direct contract. (Lab. Code, § 218.7, subd. (d).)
• Rights to Receive Payroll Records and Project Award Information from Subcontractors and to Withdraw All Payments Owed for Their Failure to Comply.
Upon the direct contractor’s request, subcontractors and lower tier subcontractors must provide payroll records and project award information. (Lab. Code, § 218.7, subds. (f)(1)-(2).) Direct contractor may withhold as “disputed” all sums owed if a subcontractor does not timely provide the requested records and information without specifying what is untimely and such failure to comply does not excuse direct contractor from any liability under this section. (Lab. Code, § 218.7, subds. (f)( 3) and (i).)
• Rights to Receive Payroll Records and Project Award Information from Subcontractors and to Withdraw All Payments Owed for Their Failure to Comply.
Upon the direct contractor’s request, subcontractors and lower tier subcontractors must provide payroll records and project award information. (Lab. Code, § 218.7, subds. (f)(1)-(2).) Direct contractor may withhold as “disputed” all sums owed if a subcontractor does not timely provide the requested records and information without specifying what is untimely and such failure to comply does not excuse direct contractor from any liability under this section. (Lab. Code, § 218.7, subds. (f)( 3) and (i).)
• Further Legislative Efforts on Subdivision (h) Are Expected in 2018.
Subdivision (h), which states that “[t]he obligations and remedies provided in this section shall be in addition to any obligations and remedies otherwise provided by law . . .” (emphasis added) is potentially misleading since the author and sponsor of the bill have indicated that the bill is not intended to punish direct contractors with liquidated damages or penalties. As such, further legislative efforts on subdivision (h) are expected in 2018.
ADDITIONAL CONSIDERATIONS
While workers should be paid for the work they perform, AB 1701 would place undue burden on general contractors to monitor their subcontractors’ payroll, confirm that all wages and benefits are paid timely and withhold disputed payments from non-compliant subcontractors. General contractors would also need to caution against the chain reaction that could result from such withholding, including work stoppage, increased change order requests, and an overall increase in construction costs. Finally, general contractors would need to brace themselves for at least a year after project completion against any union or a Labor-Management Cooperation Committee actions armed with a prevailing party’s right to recover attorneys’ fees and expert fees, for previously unidentified subcontractor or sub-subcontractor workers.
STRATEGIES DEVELOPERS AND GENERAL CONTRACTORS SHOULD LOOK FOR
In anticipation of AB 1701 being signed into law and its potentially harsh effects, developers and general contractors are advised to consult their attorneys for a review and revision of their existing contracts, to develop plans for accessing and monitoring subcontractor payroll records, and to consider strategies for mitigating claims that may be brought against them, as follows:

• Execute all pending agreements before January 1, 2018 to avoid the effects of AB 1701;
• Include an audit provision requiring subcontractors and sub-subcontractors to provide payroll records (at minimum, information set forth in Labor Code section 226) and project award information, regularly and/or upon request, with specific deadlines for such production, as subdivision (f) does not specify what is untimely;
• Include defense and indemnity provisions that would require subcontractors to defend and indemnify the general contractor for claims that are brought pursuant to this section arising from labor performed by employees for subcontractors and sub-subcontractors, and require subcontractors to include a similar provision in their own contracts with sub-subcontractors that would require lower tier subcontractors to also defend and indemnify the general contractor for claims arising from their respective employees’ work;
• Require subcontractors to provide a payment bond and/or a letter of credit to satisfy claims that are made against the general contractor under this section;
• Require personal guarantees from owners, partners or key subcontractor personnel;
• Include withholding and back-charge provisions that would allow general contractors to withhold or charge back the subcontractors for disputed amounts, for claims brought against them, and for failure to comply with the audit, bond, and guarantee requirements.
• Consider implementing a system to confirm evidence of payments, such as signed acknowledgment of payment by each subcontractor and sub-subcontractor employees and by third parties entitled to recover fringe and other benefit payments or contribution, possibly working with electronic billing software providers to implement such system.

​By Garret Murai, November 1, 2017

On October 23, 2017, the U.S. Occupational Safety and Health Administration (OSHA) began enforcement of its Respirable Crystalline Silica in Construction Standard(Construction Silica Standard). OSHA enforcement of its Construction Silica Standard actually began on September 23, 2017, but for a period of 30 days, OSHA offered compliance assistance in lieu of enforcement for employers who were making good faith efforts to comply with the Construction Silica Standard.
California’s Occupational Safety and Health Administration (Cal/OSHA) has a nearly identical construction silica standard that requires employers to limit worker exposure to respirable crystalline silica above 25 micrograms per cubic meter of air (25 μg/m3) as an 8-hour time-weighted average (TWA) under any foreseeable condition.
What is Crystalline Silica?Crystalline silica is a common mineral found in the earth’s crust. Materials like sand, stone, concrete, and mortar contain crystalline silica. It is also used to make products such as glass, pottery, ceramics, bricks, and artificial stone. Respirable crystalline silica – very small particles at least 100 times smaller than ordinary sand  – is created when cutting, sawing, grinding, drilling, and crushing stone, rock, concrete, brick, block, and mortar. Workers who inhale these very small crystalline silica particles are at increased risk of developing serious silica-related diseases, including:

• Silicosis, an incurable lung disease that can lead to disability and death;
• Lung cancer;
• Chronic obstructive pulmonary disease (COPD); and
• Kidney disease.

What is the Construction Silica Standard?There are actually two new federal respirable crystalline silica standards: one for construction and the other for general industry and maritime. OSHA began enforcing most provisions of the standard for construction on September 23, 2017, and will begin enforcing most provisions of the standard for general industry and maritime on June 23, 2018. Cal/OSHA has indicated that it will be enforcing its construction silica standard at the same time.
The Construction Silica Standard requires employers to limit worker exposure to respirable crystalline silica and provides two compliance alternatives:

1. Control Method: A “control method” in which employers implement engineering controls, work practices and respiratory protection specific to certain tasks and equipment; and
2. Assessment Method: An “assessment method” in which employers assess and monitor the exposure of employees who are or may reasonably be expected to be exposed to respirable crystalline silica above an action level (AL) of 25 μg/m3 as an 8-hour TWA.

What does the “control method” require?The “control method” is set forth under Table 1 of the federal regulations and lists 18 different tasks and equipment, such as stationary masonry saws and handheld power saws used for cutting fiber-cement board, engineering and work practice controls, such as perfuming tasks outdoors only, and respiratory protection requirements broken down into shifts of less than 4 hours and more than 4 hours. An example of Table 1 is below:

​
What does the “assessment method” require?The “assessment method” applies to tasks not listed in Table 1, or where an employer does not fully and properly implement the engineering controls, work practices and respiratory protection listed in Table 1. Under the “assessment method”:

1. Permissible Exposure Limit: Employers must ensure that no employee is exposed to respirable crystalline silica in excess of a permissible exposure limit (“PEL”) of 50 μg/m3 as an 8-hour TWA.
2. Exposure Assessment: Employers are required to assess the exposure of each employee who is or may reasonably be expected to be exposed to respirable crystalline silica at or above the AL of 25 μg/m3 as an 8-hour TWA through either: (a) any combination of air monitoring data or objective data sufficient to accurately characterize employee exposure to respirable crystalline silica (performance option); or (2) perform initial monitoring on the basis of one or more personal breathing zone air samples on each shift, for each job classification, in each work area (scheduled monitoring option).
3. Scheduled Monitoring Option: If initial monitoring indicates employee exposures are below the AL, the employer may discontinue monitoring for those employees. If monitoring indicates that employee exposures are at or above the AL but at or below the PEL, the employer is required to repeat monitoring within six (6) months of the most recent monitoring. If monitoring indicates that employee exposures are above the PEL, the employer is required to repeat monitoring within three (3)  months of the most recent monitoring. If non-initial monitoring indicates employee exposures are below the AL, the employer is required to repeat monitoring within six months of the most recent monitoring until two (2) consecutive measurements, taken seven (7) or more days apart are below the action level, at which time the employer may discontinue monitoring. Employers are required to reassess exposures whenever a change in the “production, process, control equipment, personnel, or work practices” may reasonably be expected to result in new or additional exposures at or above the AL.
4. Employee Notification and Right to Observe:Employers are required to notify each employee in writing of the results of an exposure assessment within five (5) working days after completing an assessment. If an exposure assessment indicates that employee exposure is above the PEL, the employer is required to describe in the written notification the corrective action being taken to reduce employee exposure to or below the PEL. Employers are required to provide employees or their designated representatives with an opportunity to observe any monitoring of respirable crystalline silica.

Are there other employer requirements other than the “control method” and “assessment method”?Yes. Regardless of which exposure control method is used, all construction employers covered by the standard are required to:

• Establish and implement a written exposure control plan that identifies tasks that can result in silica exposure, the engineering controls, work practices, and respiratory protection that will be used to protect workers, and the procedures to restrict access to work areas where high exposures may occur.
• Designate a competent person to implement the written exposure control plan by making frequent and regular inspections of job sites, materials and equipment.
• Prohibit dry sweeping and dry brushing where such activities could expose workers to silica, unless wet sweeping, HEPA-filtered vacuuming, or other methods that minimize the likelihood of exposure are not feasible.
• Offer medical exams–including chest X-rays and lung function tests–initially (if not received within the last three years by another employer) and every three years for workers who are required by the standard to wear a respirator for at least thirty (30) days a year.

Are there other resources to help me comply with the Construction Silica Standard?Yes. OSHA has published the OSHA Small Entity Compliance Guide for Construction, a summary of the Construction Silica Standard, and frequently asked questions regarding the Construction Silica Standard.
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How to Subscribe to Bid Events?
There are many possibilities and opportunities for builders and construction companies to be invited for new bids.The federal government is looking for all types of construction companies to bid on their construction projects. Many of the projects require having participation from small business, local contractors, minority contractors, and tribal firms among others.
But how do you get into that kind of business?
We will present some of the most common resources used in the construction industry to get bids, request for proposals and request for qualification for several of opportunities waiting for you. The majority of the projects go out to bids starting on June through September when the fiscal year comes to an end.
Initial Bidding Requirements
As a contractor, you must prepare a business plan, containing the ideas on how you are going to sell your services, complete list of offerings, financial data and support documents that will complement your knowledge in the industry. Your local small business administration office can help you with the preparation of your business plan. Remember is not only your experience, you also need some financial backup.
If you are starting a new company or haven’t done the IRS registration, you must enlist and get an employee identification number (EIN, Federal ID Number), this is a requirement if you want to bid on federal or government projects.
How to Subscribe and Appear on the Bidders List
Apply for a Dunn & Bradstreet number (also called D&B or Dunns). This register is necessary if you want to get listed in the Central Contractor Registration (CCR), to the government. You control the accuracy of your business information and it will be accessible to all Federal agencies with which you do business.
You have access to update your information whenever necessary. Annual renewal is required to remain active. Many agencies will use this system for payment and contract formation purposes.
Furthermore, you might want to register with ORCA. ORCA is an e-Government initiative that was designed by the Integrated Acquisition Environment (IAE) to replace the paper based Representations and Certifications (Reps and Certs) process.
Finally, you can also select your NAICS code. The North American Industry Classification System (NAICS, pronounced Nakes) was developed as the standard for use by Federal statistical agencies in classifying business establishments for the collection, analysis, and publication of statistical data related to the business economy of the U.S.
Bid Sources
Once you got all your initial requirements ready and filled out, then you must start looking for bidding opportunities and construction bids. Here is a list of common places where to find bids, proposals, and solicitation information.
FBO- This is a free service. You have a good bit of flexibility in setting up your firm's profile. They also have an automatic notification system that, given your parameters, will send an email with projects that fit your requirements and inform you of the bids and new construction going out.PTA Centers- They provide a wealth of information and technical assistance. They are a local resource available at no or nominal cost that can provide assistance to business firms in marketing products and services to the Federal, state and local governments.Daily Journal of Commerce- The daily journal of commerce will list the local opportunities available for you to bid. The DJC provides news and public records for local business professionals in the industries of construction, architecture, engineering, commercial real estate and law.
There are also other sites that will require you a subscription sometimes for a small amount of money that will email you with the latest information depending on your requirements and parameters, such as:
Gov Directions - It is inexpensive and accurate.

How to keep yourself motivated and focused on business growth
Sometimes success is a double edge sword. Achieving your goals can be the most rewarding part of business, but equally, if you don’t get there as soon as you would have liked, it can be disheartening. This is one of the key areas of business that affect small businesses. If the company is not growing according to plan, it can be hard to stay motivated.


Plus, there are numerous distractions that can get in the way, taking time away from what should always be your number one goal – business growth.


Keeping your eye on the ball: Avoiding distractions


Admin and paperwork – This is one of the main hurdles to overcome for any small business. It’s estimated that the majority of small businesses spend around an hour each week just taking care of the paperwork. That’s 52 hours a year that you could be spending on hitting your targets. Yet the quotes, invoices, payroll and accounts all need to be taken care of for the business to function.
There are online admin services that can help, such as Construction Entrepreneurs School and Services, who offer quoting programs and invoice templates that help you get paperwork off your desk as soon as possible.


Meetings – All companies need to have a clear and defined direction, which is why team meeting are always important. But they do have a tendency to drag on, unless they are properly martialed. Unless there are exceptional circumstances, most meetings should take no more than half an hour, with clearly defined agendas.


Extracurricular activities – Business seminars, trade fairs, networking – these are all important parts of business but it’s all too easy to spend a little too much time away from the core business. Learn, meet and network but make sure you’re putting these new skills into practice


You can’t do it all yourself: Learn how to delegate
It’s all to easy to try and do it all yourself. One of the major stumbling blocks for small business owners is learning how to delegate. It’s been shown that most managers can unload up to 20% of their workload without there being a detrimental effect on other staff and productivity.
Train and trust your staff, let them take care of some of the everyday chores and running of the business, which leaves you free to focus on driving the business forward.


Why a strategy works
It’s crucial that you never lose sight of why you’re in business. To do this, you should always develop a business plan and strategy for achieving that from the outset.
Frame it, put it on a wall and constantly refer to it. Outline where you want to be in six months, a year, five years – and then assess where you are at these landmarks. A business with a good idea but no plan is bound to drift, and that spells disaster.

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Stay focused, stay on plan and keep pushing to hit your targets.

Estimates vs. Quotes
 
Should you be sending quotes or working out estimates? Providing a fixed quotation for the cost of work or estimating all the costs? Estimates vs. Quotes – what’s the difference and which should you use…?

Odds are that as a tradesperson or small business, you spend a good deal of your valuable time writing out estimates or quotes for potential new customers.
However, there can be a lot of confusion between the two.
Contrary to what you might think, there is a world of difference between providing a quote and giving an estimate.

So, the question is: 
​Do you know the important differences between an estimate and a quote?

Quotes vs. estimates explained
For small businesses which provide any kind of service (rather than a set price product as shops do) providing customers with an idea of what they can expect to pay for a particular job is a fact of life.
It can be a time-consuming, thankless job – especially if you’re not all that comfortable with putting pen to paper in the first place.

Understanding the difference between quotes and estimates, using the right one at the right time and making sure they have all the necessary information is critical.
​
We’ve written this simple, easy to understand guide to estimates vs. quotes to help you out –  here’s what you’ll learn:

• What the differences are
• When to use an estimate and when to give a quote
• Why it matters
• Important details you need to include

You’ll also find the answers to the most frequently asked questions about estimates and quotes.

What’s the difference between an estimate and a quote?
The first thing to understand about quotes and estimates is that they are NOT just two different names for the same thing.  Estimates and quotes each have distinct uses, benefits & disadvantages. Knowing these is key to avoiding problems that can cost you time, customer goodwill and even money.

Let’s look at estimates, first:
What’s an Estimate?

An estimate is basically a ‘guesstimate’ or rough, educated guess based on what a job MAY cost. Often it is supplied either before you know all the details of a particular piece of work (such as during an initial call from a prospective new customer) or during a site visit.
Estimates are your first thoughts on costs and can change drastically when you get further information, when unexpected complications crop up during the work or the scope of what you have been asked to do increases.

Key point: An estimate is an informal idea of price based on limited information. Consider it a starting point in terms of costs, which can go up (or down). Estimates CANNOT be used as a legal standpoint for price.

For example, let’s imagine that you’ve been asked to plaster an average size bedroom.
Mrs. Smith calls to ask about the cost of skimming her spare bedroom. She doesn’t have exact measurements but says it’s ‘average sized’. In addition, she mentions that there’s still some old wallpaper in place that needs removing.
Hence your estimate might look like this:

What’s a Quote?
A quote (or quotation) is an exact price for the job being offered. As such it is fixed and CANNOT be changed once it has been accepted by the customer (unless the customer changes the amount/type of work required or you discover something completely outside of the scope of what was agreed).

Quotes are only issued after an onsite visit or where you are confident that you have established exactly what is needed.

Key point: It’s important to remember that quotes are presented formally and represent a contract between you and the customer. As such they can be used as legal standpoints for price should a dispute arise.

Understandably, quotes give customers peace of mind; safe in the knowledge that they know exactly how much the work will cost before the job begins.
In our example with Mrs. Smith, following a visit to her home, you might have discovered that her spare bedroom is larger than average and that there is a substantial amount of old wallpaper that will take a bit longer to remove that you initially thought.
As such, you can see from the example below that your written quote has more detail and is a much more accurate reflection of the true cost of the work needed (in this case adding another $75 to the price) :

Estimate or Quote? Key Points to remember…

• Estimates are a rough idea of price. They should be used as an initial GUIDE PRICE ONLY.
• Quotes are legally binding and should ONLY be used when you are certain of the costs involved.
• NEVER label a written estimate as a ‘Quote’ – You can be held to the figure provided.
• ALWAYS ensure that the customer understands whether they are getting an estimate or a quote.

Frequently asked questions about estimates vs. quotes
Understanding the difference between an estimate and a quote is just the first step on the road to realizing the potential of making both work harder for you. Admin and inquiries take up valuable time, so we’ve detailed some of the most commonly asked questions about estimates and quotes below. These not only expand on certain elements and why they are important but also give a few helpful suggestions too.

Should I always provide a written estimate or quote?
As the saying goes: verbal agreements aren’t worth the paper they’re written on. Estimates and quotes should always be provided in writing. If a query or problem arises later on it’s a good idea to have something in writing to fall back on – these make resolving any misunderstandings easier. Don’t forget to keep copies of all your estimates and quotes.

Is it OK to handwrite my quotes or estimates?
While handwritten documents are still acceptable you should ensure that these are both readable and professionally presented – nothing turns off a potential client faster than trying to decipher illegible scrawl on a scrap of paper. Your quotes and estimates should be a reflection of the level of professionalism your customers can expect from your services. Always use headed stationery with your business name and full contact details included. Anonymous blank paper makes customers nervous about the validity of your business.

What details should I include in my estimates or quotes?
Always make it clear whether you are providing an estimate or a quote, as in the examples above.

Since estimates are rough approximations of cost they should be reasonably clear but don’t have to be as detailed as a quote. Describe the job clearly in general terms. Estimates should always include a disclaimer that the price is subject to change depending upon a more detailed quote being prepared.

Once you have a better idea of exactly what’s involved then a detailed quote should be supplied. Be as specific as possible, including:

• The customers details and the address/location of the work to be carried out
• A reference number (if needed)
• The date
• A breakdown of the elements (including labour, materials or special costs)
• An accurate description of what is covered by the quote and (if necessary) what is not
• The total price
• Any VAT element should be detailed. Remember you can only charge VAT if you are registered for VAT with HMRC. You must show your valid VAT registration number on all documents.

Do I need to include my terms & conditions in both?
If you have formal terms and conditions drawn up always include a copy with your estimate or quote. This not only gives your customer with a very positive impression of your business being upfront and honest, it also provides them with information such as your normal payment terms, deposits required, penalties for non-payment, etc.

Do estimates and quotes both need dates?
Dating estimates and quotes helps you determine exactly when you prepared them. However, it’s also a good idea to specify the period for which your estimate or quote is valid for – Normally, this can range from 30 to 90 days after the date on the document, depending on your business or preference. Fees and costs naturally increase over time so setting a limit on how long your price is good for protects you from being caught out by old estimates or quotes which are now unrealistic.

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This is not a one size fit all steps all businesses.
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