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Avoid These 4 Contractor Misconduct Errors

Authorities have ramped up their efforts to identify contractor misconduct. There are hefty fines to pay and jail time to serve for offenders. Don’t let your construction business get caught up in these errors.

As contract work makes up most of construction, these errors are especially prevalent in the industry. Make sure you are not accidentally committing any of these mistakes.

Error #1: Misuse of DBE programs

The Disadvantaged Business Enterprise (DBE) Program helps for-profit small businesses where economically disadvantaged individuals own at least 51% of the business.

The U.S. Department of Transportation (DOT) mandated that 10% of its contracts go to DBEs. There are some companies that have tried to take advantage of this opportunity by falsely claiming that they are a minority-owned business.

One group of executives received a sentence of five years in federal prison, two years of supervised release and a fine of $250,000 for this type of misuse.

To avoid these fines, only participate in DBE programs if your business legitimately qualifies.

Error #2: Brushing Safety Violations under the Rug

The construction industry is a rewarding career path for many. But construction sites can be dangerous work environments. Nearly all construction site deaths are because of the “Fatal Four” accidents – falls, electrocution, struck-by objects and caught-in or between objects. Learn how to prevent these accidents here.

Even with the best of intentions, sometimes safety violations happen. When they do, it’s best to address them immediately and not brush them off. A delayed safety violation response and correction can cause even a small issue to wreak havoc down the road.

While the federal government may not have been stringent with these kinds of misconduct previously, President Barack Obama signed the Fair Pay and Safe Workplaces Executive Order in 2014. This has put more pressure on not just safety violations, but pay regulations as well.

Error #3: Mishandling Independent Contractors

With the above mentioned executive order, properly classifying your employees is even more important. The reason why some employers have opted to classify employees as independent contractors is because they save money on payroll taxes.

The big issue with this mishap is that listing skilled labor staff as independent contractors takes away some employee benefits. They don’t have the same access to regulations with minimum wage, overtime pay and unemployment benefits.

Here’s 6 factors to consider when determining if an employee is an independent contractor or an employee.

Error #4: Accepting Payment for Unfinished Jobs

There are reports of contractors taking money for services not rendered. For instance, one New Jersey contractor was arrested and charged with theft by failure to make required disposition after he took payments for a job he never completed.

To protect yourself against these types of errors, set up payment collection based on the work you do.

Managing risk is important. Let us help you. With CLC’s core practices and Human Resources expertise, we can handle all your administrative concerns. Learn more today.

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