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Builders Association of Minnesota Letter

BAM Letter to the Minnesota Department of Health About Lead Rules

The following is a letter drafted to the Minnesota Department of Health

 

September 19, 2023

Dear Minnesota Department of Health,

 

The Builders Association of Minnesota (BAM) is writing to comment on the Proposed Permanent Rules Governing Lead Renovation, Repair, and Paint, dated July 12, 2023.

BAM represents nearly 1200 residential builders, remodelers, subcontractors, and industry partners across Minnesota. We understand the dangers and health effects of lead on children, and we are committed to working with the Department to develop effective rules to protect public health.

We have several concerns about the proposed rules. First, we believe that the Department should adopt the EPA’s Lead Renovation, Repair, and Painting (RRP) Rule by reference. This would simplify the rules and make them easier to understand and comply with. Thirteen other states have already adopted the EPA rule by reference, and we believe that Minnesota should do the same.

Second, we believe that the proposed rules are too prescriptive and burdensome. For example, the rules require that training classes have no more than 24 participants and that hands-on training courses have an instructor-to-student ratio of no more than 8 to 1. These requirements are more stringent than those for K-12 and higher education classes, and they will make it more difficult and expensive to train workers.

We are also concerned about the enforcement of the proposed rules. The rules are complex and contain a wide range of requirements. It is unclear how the Department will be able to enforce all these requirements statewide.

We urge the Department to reconsider the proposed rules and develop a new set of rules that are simpler, more flexible, and easier to enforce. We also urge the Department to increase stakeholder input and interagency cooperation in the rulemaking process.

Specifically, we recommend the following:

  • Adopt the EPA’s RRP Rule by reference.
  • Reduce the prescriptive nature of the rules and give more flexibility to contractors.
  • Develop a clear and complete enforcement plan.

We are committed to working with the Department to develop effective rules to protect public health from lead exposure. We believe that the changes we have recommended will make the rules more workable for contractors and more effective in protecting the public.

Paid Family Leave

All You Need to Know About the Minnesota Paid Family and Medical Leave Law

When does the program start?

Workers will be able to begin taking leave and receiving benefits on January 1, 2026. Workers and employers will begin contributing to the program on that same date.

Who does the law cover?

The law will cover nearly all employees in Minnesota, including both private sector and state and local government employees. It will cover employees regardless of employer size and include both full-time and part-time workers, with a limited exception excluding certain seasonal workers from coverage. Self-employed people will be able to voluntarily opt into coverage.

What kinds of leave does the law provide?

Minnesota’s law will provide through the Department of Employment and Economic Development and includes:

  • Medical leave to address workers’ own serious health conditions, including pregnancy.
  • Caregiving leave to allow workers to care for a loved one with a serious health condition.
  • Parental leave to provide workers the time to bond with a new child.
  • Safety leave for certain needs when workers or their loved ones experience sexual or domestic violence.
  • Deployment-related leave to deal with the impact of a loved one’s military deployment.

Who will be eligible for benefits?

To be eligible, workers will need to have earned at least 5.3 percent of the state average annual wage in total over the base period—a designated 12-month period prior to the start of leave. Based on the current state average annual wage, workers would need to have earned about $3,684 in the base period to qualify.

Benefits are portable, meaning that income earned across all covered Minnesota employers in the base period counts toward the total. This means that someone who recently changed jobs could count income from their past job as well as their current job, while someone with two jobs could count income from both. In other words, workers keep their eligibility for the monetary benefits, even as they change employers, and could be eligible for monetary benefits as soon as they start with an employer if they were previously eligible.

How much time can workers take?

The legislation breaks benefits into two categories: 1) medical leave, including for pregnancy or recovery from childbirth, and 2) all other kinds of leave, that is parental leave, safety leave, caregiving leave, and deployment-related leave. Workers can receive up to 12 weeks of leave in each of the two categories per benefit year.

Workers who need leave from both categories can take up to 20 weeks total in a benefit year.

What family members can workers use leave to care for?

A family member will include a worker’s spouse or domestic partner, child, parent, sibling, grandchild, or grandparent, as well as many relationships by marriage. The definition of family will also include “an individual who has a relationship with the applicant that creates an expectation and reliance that the applicant care for the individual, whether or not the applicant and the individual reside together,” recognizing that many workers need to care for a loved one to whom they may not have a legal or biological relationship.

Will workers’ jobs be protected while they take leave?

Anyone who was hired at least 90 days prior to their leave, employees will have the right to get their job, or an equivalent job, back following covered leave, regardless of the size of their employer or how many hours they work per week.

Employees who receive health insurance through their employer will be entitled to keep their coverage while on leave.

Employers are prohibited from interfering with employees’ rights or retaliating against employees for using those rights.

How much money will workers receive when they take leave?

Wage replacement rates—the percentage of their own income that workers receive while on leave—will be progressive. Progressive wage replacement balances the need for lower-income workers to receive as high as possible a percentage of their own income while on leave with the need to keep program costs, which are ultimately borne at least in part by workers, affordable.

Workers will receive:

  • 90 percent of the portion of their weekly wages that is less than or equal to 50 percent of the state average weekly wage, plus:
  • 66 percent of the portion of their weekly wages that is more than 50 percent of the state average weekly wage but less than or equal to 100 percent of the statewide average weekly wage, plus:
  • 55 percent of the portion of their weekly wages that is more than 100 percent of the state average weekly wage:

Benefits will be capped at 100 percent of the state average weekly wage. For 2023, 50 percent of the state average would equal $668.50 per week, and 100 percent would be $1,377.00 per week.

How will the state pay for the program?

Initially, the program will be funded through substantial appropriations from the state’s general fund. This initial funding will jump-start the program’s insurance fund, making it possible for benefits to begin at the same time workers and employers begin paying in, without waiting for contributions to build up in the fund.

Going forward, the program will be funded with payroll premiums split evenly between employers and employees. When premiums begin on January 1, 2026, the rate will be 0.7 percent, meaning that employees and employers will each pay 0.35 percent on income up to the maximum income $162,000 (if implemented now in 2023). Rates will later be adjusted annually based on program usage. Employers with fewer than 30 employees will pay a reduced amount, which the fund will absorb; employees at small employers will pay the same amount as those at larger employers.

How will workers access benefits?

Like other state paid leave programs, Minnesota’s new law will create an insurance system. This means that, typically, when workers need benefits, they will apply to the state, which will process their claim and pay benefits out of the state insurance fund. Employers will not need to pay employees while they are on leave.

Employers can request special permission to provide benefits through a private plan.

Notice Requirements
Employers will be required to post a notice prepared by the State regarding paid FMLA benefits. Individual employees must also be issued written notices that contain certain information designated in the statute. These notices must issue at least 30 days from the beginning of the employee’s employment, or 30 days before premium collection begins, whichever is later.

 

Note – This was put together from the bills text and background , BAM Session Report, Center for American Progress, Arthur Chapman Law Firm, and other assorted news stories.

Construction Workers

An Introduction to the New Construction Worker Wage Protection Act

Prepared exclusively for the Builders Association of Minnesota (BAM) by Nicholas Strafaccia of the Arthur Chapman Kettering Smetak & Pikala P.A.

 

Coming into effect on August 1, 2023, Minnesota’s legislature passed a substantial amendment to the state’s wage protections for construction workers. While in 2019, it was thought Minnesota already had some of the country’s most stringent laws, the 2023 amendment takes it a step further. Within the amended Article 10 of the Construction Worker Wage Protections statute the (“CWWP”), a contractor may be liable to a subcontractor’s employee for unpaid wages and benefits. The new law leaves much for a court to interpret; however, for your benefit we have looked into the plain language of the CWWP statute and compiled helpful information for the Builders Association of Minnesota’s members. We hope this article can help our members navigate these new waters.

In what will be labeled as Minn. Stat. § 177.27 and Minn. Stat. § 181.165, the legislature has pushed liability for unpaid subcontractor employees upstream: “[a] contractor entering into a construction contract shall assume and is liable for any unpaid wages, fringe benefits, penalties, and resulting liquidated damages owed to a claimant or third- party acting on the claimant’s behalf by a subcontractor at any tier acting under, by, or for the contractor or its subcontractors for the claimant’s performance of labor.”

At legislative hearings, it was argued the bill would provide protection to exploited construction workers who have been victimized by wage theft contractors. The CWWP supporters specifically stated the new law would protect immigrant workers. A quote from Adam Duininck, director of governmental affairs for the North Central States Regional Council of Carpenters, states the new law will, “tilt the playing field so it’s even between the generals and the workers, because right now the playing field between the workers and their own employers is not equal at all.”

Despite wide opposition to the CWWP across the construction industry, the union backed bill passed and will soon become a reality for all contracts and agreements entered into, renewed, modified, or amended on or after August 1, 2023.   

The purpose of this article is to walk through a few of the basic concepts found in the CWWP. This article does not discuss every aspect of the new law and, be advised, as these laws will inevitably be challenged in court, the information in this article may fluctuate. With that said, when reading the CWWP, there are a few questions that come to mind: who is considered a contractor? What is considered a construction contract? Are there any exceptions to this new law? What does enforcement of this new law look like? And likely the burning question, what can I do now? These questions will be answered in turn below.

 

  1. Who is considered a contractor?

 

Contractor is defined in the new law under section 6, subdivision 1, section (e). “A contractor is defined very broadly and more or less, includes all entities above the subcontractor whose employee is making the allegation of wage theft––regardless of how many sub-subcontractor levels may be at play. The CWWP defines ‘contractor’ to include individuals, firms, companies, “or other entit[ies].” The definition specifically includes construction managers and general contractors.

Expanding the definition further, project owners may be considered a contractor as well: “[a]n owner shall be deemed a contractor and liable as such under this section if said owner has entered into a construction contract with more than one contractor or subcontractor on any construction site.” The perceived goal with this sentence is to button up any attempt by a general contractor to alleviate its liability by also owning the construction project. However, the broad nature of the writing could include many sophisticated project owners who, at times, directly contract certain aspects of the work themselves rather than to the general contractor.

 

  1. What is considered a construction contract?

 

The CWWP defines a Construction Contract under section 6, subdivision 1, section (d), a construction contract includes any and all agreements, written or oral, for the construction, alteration, remodeling, repair, maintenance, demolition, excavation, etc. that relates to the development or improvement of land. Reading the plain language of the definition, it’s hard to imagine any agreement in the construction industry that is not included in the definition.

Beyond defining the term, the definition builds in an exception by also defining what “shall not” be considered a construction contract:

a construction contract shall not include a home improvement contract for the performance of a home improvement between a home improvement contractor and the owner of an owner-occupied dwelling, and a home construction contract for one- or two-family dwelling units except where such contract or contracts results in the construction of more than ten one- or two-family owner-occupied dwellings at one project site annually.

This section of the definition is murky. How the exception, and exception to the exception, reads is open to multiple interpretations and as a result, is ambiguous. Furthermore, rather than putting this language in an exception subdivision, it forces a contractor to parse out what may be a valid construction contract in legal terms, from what the CWWP defines as a construction contract.

Starting with the first portion of the above, under the CWWP it is not considered a construction contract if a homeowner hires a ‘home improvement contractor’ to complete work on the home which the homeowner resides in––i.e. the owner’s dwelling. Seemingly, the legislature is attempting to do two things: (1) protect smaller residential projects and (2) limit an owner’s liability by narrowing the CWWP’s ‘Contractor’ definition. Recall, if an owner enters into more than one contract related to the same project, it is considered a contractor––and possibly liable under the CWWP. However, if the owner’s contracts are between a homeowner living in the home and a home improvement contractor, the CWWP does not apply.

A few points to be aware of with this section, there are many undefined terms (at least not defined in the CWWP). For example, what is considered a “home improvement contract?” What is a considered a “home improvement contractor?” While other Minnesota statutes define these terms, the CWWP does not. These are questions that cannot be resolved by a plain reading law.

The second sub-definition of what is not a construction contract is a bit more confusing. Starting off, the definition of a construction contract does not include, “a home construction contract for one- or two-family dwelling units.” This seems clear enough. Residential builders, building for example, single-family homes and certain townhouses, are not subjected to CWWP because those contracts are not considered construction contracts.

However, the definition builds in an exception to this exception which may cause confusion: “except where such contract or contracts results in the construction of more than ten one- or two-family owner-occupied dwellings at one project site annually.” In an attempt to break down the exception requirements, residential builders must comply with the CWWP if, (1) within one year; (2) you enter into one or more contracts, (3) resulting in more than ten––i.e. eleven total buildings, (4) each building is either a one or two family, owner-occupied dwelling, and (5) the eleven buildings are all part of the same construction project/development.

This break down may leave you scratching your head. The first question that comes to mind is, who are the parties to this “home construction contract?” We don’t have the “owner” and “home improvement contractor” the law’s author used previously. Another question, how can you construct a new home that at the same time is an owner occupied dwelling? An ‘owner occupied dwelling’ requires the building to be an owner’s primary residence. Recall another requirement demands the project be a home construction contract––i.e. more often than not, the building doesn’t exist at the time the contract is entered. Therefore, it can be presumed that any potential owner would have a different dwelling at the time the contract is entered into making this exception inapplicable.

While the list of questions could continue, the belief is that this exception is meant to apply to general contractors’ subcontracts to build new homes within the same development. If, within one year, you build at minimum eleven single or double owner-occupied dwellings, you must comply with the CWWP. Yet, how the law has been written and can be interpreted, will most likely be the source of future litigation.

 

  1. Are there any (other) exceptions to this new law?

 

Section 6, subdivision 6 of the CWWP is titled, “Exemptions.” As previously pointed out, these are not the only exemptions removing a contractor requirement to abide by the CWWP. The definition section of who a contractor is, and what a construction contract is, more or less, creates exemptions. Beyond the definitions, section 6, subdivision 6 defines additional exemptions. For the purposes of this article, the union exemption will be touched on. The CWWP shall not apply to any, “contractor or subcontractor that is a signatory to a bona fide collective bargaining agreement” with a trade or labor organization. The organization’s collective bargaining agreement must include a grievance procedure to recover unpaid wages and a procedure to collect unpaid contributions to the fringe benefit trust fund.

To overly simplify, if the subcontractor or contractor is part of a union, they do not face the liability assumptions put in place within the CWWP. However, should a union subcontractor fail to pay its employees, the employees could assert claims against a non-union contractor to recover funds. Further, depending on the union’s bargaining agreement, an unpaid union member can designate the union, who did not receive fringe benefit contributions from a union member, to make a claim against a non-union contractor to recover those funds. It cannot be ignored the power a union has to assert and litigate a claim verses an individual union member.

 

  1. What does enforcement of this law look like?  

 

Should a subcontractor’s employee believe its wages, or other benefits were unjustly withheld, he/she has the option of initiating a civil lawsuit directly in district court––noting there is no notice requirement or timeframe for an upstream entity to investigate the claim pre-suit. The employee has the option of designating a “person, organization, or collective bargaining agent,” to file the complaint in district court on the employee’s behalf. The complaint can be filed against the person’s employee and any upstream contractor––barring the exemptions previously discussed.

Should the court rule in the employee’s favor, the court is required to award the employee its attorneys’ fees and costs. Should the court rule in the employer or contractor’s favor, there is no collection of attorneys’ fees or costs. The statute also puts a three-year time limit on the employee’s claims. The CWWP itself directs us to Minn. Stat. 541.07, clause 5 as the controlling statute of limitations. Clause 5 reads, “the limitation is three years.” Meaning, upstream contractors should be aware of possible liability under the CWWP for up to three years after final payment has been made on a project.

Last note, per the statute, a contractor and subcontractor are jointly and severally liable for the employee’s unpaid wages and benefits. This means, regardless of a contractor’s actions, if the subcontractor is found to be liable in court, the contractor shares that liability. There has been talk around the industry that enforcement is going to start with the general contractor and work its way down. Meaning, for example, a fourth-tier subcontractor commits wage theft against its employees. The employees of the that subcontractor will file a claim against the project’s general contractor requesting payment. The general contractor will then be tasked with paying the wages, and filings its own claim against the bad-acting subcontractor.

 

  1. What can I do now?

 

This is the golden question. Like all important questions, the answer is never simple. We have identified three possible options you can explore within your company or with your attorney. Because the law is not in effect nor has it been challenged, these are preventative measures to weigh internally at your organization. Should you want to discuss any of these in more depth feel free to reach out to BAM or Nicholas Strafaccia J.D. at the Arthur Chapman Kettering Smetak & Pikala Law Firm.

 

  • Discuss your concern with your Subcontractor Default Insurance (SDI) carrier or agent. SDI policies are meant to provide coverage to contractors for economic loss incurred due to the actions of their subcontractors. Depending on your policy and the language within, you may have insurance coverage for a claim made under the CWWP.

 

  • While not the easiest avenue, a contractor could force its subcontractors to obtain payment bonds for each project. These bonds are legal contracts between the subcontractor and a surety bonding agency. The bond will only be disbursed if there is a claim of non-payment. This significantly decreases a contractor’s liability for CWWP claims.

 

  • Require certified payroll reports during a project. Certified Payroll reports confirm that all subcontractor employees have been paid during the previous pay period. Depending on the subcontractor’s ability, a contractor’s contract can be amended to include a requirement that certified payroll reports be submitted prior to contractor releasing payment.

 

  • Finally, trust your subcontractors. This avenue is not suggested for subcontractors you hire for the first time. However, if your company has built a strong relationship with a group of consistently used subcontractors, simply doing business as usual is a viable option.

Builders Association of Minnesota Letter

BAM Letter of Support to Higher Education Conference Committee

The following is a letter drafted to Chair Pelowski; Representatives Wolgamott & O’Neill Chair Fateh; Senators Oumou Verbeten & Putnam

 

May 1, 2023

Re: BAM Written Testimony; SF2075

On behalf of the Builders Association of Minnesota (BAM), I would like to thank you for the opportunity to share written testimony. Our membership of nearly 1600 residential builders, remodelers, subcontractors, and industry partners are joined together through eleven local associations across Minnesota, and we are proud to be the statewide voice of the Minnesota Home-Building Industry since 1974.

BAM Strongly Supports:

  • Adding ”Construction” As An Eligible Field Of Study For MnSCU Workforce Scholarships: We applaud Chairs Pelowski and Fateh for their leadership by including language from SF1177 (Putnam) / HF2842 (Wolgamott) that expands eligibility for MnSCU Workforce Scholarships to the construction field of study. Residential construction careers are challenging and rewarding, and our members are committed to current and future workforce needs that help address Minnesota’s housing availability and affordability crises. We appreciate efforts like these that grow opportunities for students.
  • Investing In Workforce Scholarships: Workforce Scholarships can make a meaningful difference to students interested in the field of construction, so we applaud the investments in both the House and Senate bills. We urge the Conference Committee to adopt the larger $21.4M House commitment.

BAM respectfully requests that these provisions be included in your Conference Committee Report.