Monday, August 31, 2009

OSHA Keeps an Eagle Eye on Texas

Workplace safety should be the at the top of the priority list for every industry, but the construction industry should give it even more importance because of the often times dangerous nature of the business. Worker protection is a worthy goal in and of itself, but there are, of course, other advantages to injury prevention. Lower insurance premiums, fewer missed work days (and hence, increased productivity), and employee morale are all side benefits of a safe workplace.

And so is OSHA compliance. OSHA has recently increased the number of inspectors in Texas in an effort to bolster construction site safety compliance. To do so, it has brought in inspectors from outside of Texas.

OSHA announced that it is focusing on Texas because the state has the highest rate of construction site fatalities. As many companies have learned the hard way, OSHA violations can be quite costly. For example, in May 2009, the organization issued citations to a Dallas-area company for one repeat and two willful violations. The proposed penalties totaled $60,000. (The investigation was prompted by a workplace fatality, which is likely to bring litigation and significantly increased costs beyond OSHA fines.)

Attention to workplace safety should permeate every business in the construction industry. A culture of safety should be instilled from day 1 with every employee. It begins with the implementation of policies and employee training. It continues with daily vigilance on safety issues in the office and on job sites. And it is brought full circle with an intolerance for poor practices.

Fortunately, the overall trend in safety has shown steady improvement. Since OSHA was created in 1971, occupational deaths have been cut by 62% and injuries have declined by 42%. More recently, the AGC announced the results of a new analysis that found construction safety incidents dropped 38% over the last ten years and the construction fatality rate declined 47 percent since 1998, the year the federal government switched to a safety oversight approach known as "collaborative safety."

There are countless legal issues that could be discussed in the context of workplace safety, but the one that stands above them all has less to do with a courtroom and more to do with avoiding a very unpleasant conversation with a wife, mother, or parent. For that reason alone, the quest for a safe workplace is a battle worth fighting every day.

Monday, August 17, 2009

What the Construction Industry Can Learn from the Healthcare Reform Debate

It has been impossible lately to turn on the television or radio, much less the news, without getting an earful about the healthcare reform debate. Regardless of how you personally feel about the reform, there are two important lessons that can be learned from this debate–and neither have anything to do with healthcare!

One of the initial complaints about the proposed healthcare legislation was that members of Congress had not even read the 1000+ page bill and did not know its provisions. What does this have to do with construction? Unfortunately, quite a bit. Just like many Congressmen were not initially very informed of many of the intricacies of the healthcare bill, many contractors and builders are not fully aware of all the terms of the contracts they enter.

Throughout my practice, I have seen numerous instances where I have asked parties whether certain clauses were in their contracts and they simply did not know. I can tell you from experience that it is very difficult for a contractor to manage liabilities and risk on their projects–not to mention payments–if they do not have a thorough understanding of the binding contracts they sign.

Sometimes construction contracts can be fairly lengthy, and often they contain quite a bit of boilerplate language. They may even "look" similar to the hundred other contracts you have signed. But contractors should read every contract thoroughly before entering into it, because that document will govern any disputes that arise later.

Another lesson to be learned from the healthcare debate–misinformation can be costly. For every accurate report on the healthcare bill and the discussions surrounding it, there is probably at least one inaccurate report. Similarly, contractors often have misunderstandings about their contracts. In addition to being familiar with the terms of their contracts, every contractor should know whether all the clauses in their contracts are actually enforceable before signing. For example, Texas law has some very specific requirements about indemnity clauses, and if those requirements are not met, the indemnity clause will not be enforceable. The contract language itself may be clear enough, but if it does not meet these technical requirements, it is worthless. The same goes for liquidated damage provisions; poor contract drafting that does not meet certain criteria could void these provisions as well. Being accurately informed about the validity of your contractual obligations is key.

Regardless of one’s feelings on healthcare reform, it is unquestioned that the proposed bills would bind the country’s healthcare industry to certain standards and requirements and it would involve substantial amounts of money. That sounds a lot like construction contracts. This may sound like basic common sense, but it is very true in this industry–an ounce of prevention beats a pound of cure. Familiarity with your contracts and knowing their enforceability before signing is the best way to position your company to minimize its liability, shift risk, and ensure prompt payments.