Best Practices Construction Law : Construction Lawyer & Attorney : Matthew DeVries : Stites & Harbison Law Firm : Green Building & LEED Litigation

Today's guest post is from my good friend and law partner, M. Clark Spoden, who focuses on business litigation, labor and employment, environmental and construction law. The full article was published by Construction Executive. You can contact Clark at clark.spoden@stites.com.

Last April, the U.S. Equal Employment Opportunity Commission (EEOC) issued its long-awaited Enforcement Guidance regarding employers’ use of arrest and conviction records in employment decisions.

The guidance highlights the EEOC’s approach to using criminal records in background checks. Because claims can be made against employers by people who are injured by negligently hired or retained employees, firms need to know the risks involved in hiring decisions. Construction companies must walk the tightrope between potential claims of race discrimination by their employees or the EEOC, and claims by victims of those employees’ actions.

Essentially, employers must take due care to avoid presenting unreasonable risks of injury to their employees (and others), while limiting the use of arrest or conviction records in their hiring decisions.

Negligent Hiring. Negligent hiring and retention is a civil action (called a tort) recognized across the United States. According to the 2002 case Morris v. JTM Materials, Inc., an employer may be liable for negligent hiring if it knowingly (or should have known by the exercise of reasonable care) hires an incompetent, unfit or dangerous employee—thereby creating a foreseeable unreasonable risk of harm to others. In other words, a victim of a tort may recover against an employer for negligent hiring, supervision or retention of an employee if the victim establishes the elements of a negligence claim. The victim must prove the employer knew the employee was unfit for the job and verify the victim’s injury was foreseeable (see Phipps v. Walker).

It’s difficult for an employer to dismiss a negligent hiring claim without a trial. Given the importance of foreseeability, records showing a person has been arrested or convicted of a similar offense in the past could be used by the victim as evidence that similar conduct was foreseeable and could have been prevented by the employer by not hiring (or retaining) the employee.

The EEOC’s View of Arrest and Conviction Records.  Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex or national origin. According to the EEOC, approximately 6.6 percent of all persons born in the United States in 2001 will serve time in state or federal prison during their lifetimes. Assuming current rates continue, approximately one in 17 Caucasian men will serve time in prison compared to approximately one in six Hispanic men and approximately one in three African-American men. In light of the relatively high conviction rates for African-American and Hispanic men, the EEOC issued its guidance in April 2012 as an update to prior policy statements about Title VII and using criminal records in employment decisions.

The EEOC found the reliability of criminal arrest and conviction records was suspect, stating “[A] significant number of state and federal criminal record databases included incomplete criminal records…[and] reports of documented criminal records may be inaccurate.” Additionally, the EEOC concluded third-party proprietary databases vary significantly in the types of information compiled and may be “missing certain types of disposition information, such as updated convictions, sealing or expungement orders or orders for entry into a diversion program.” In essence, “whether a covered employer’s reliance on a criminal record to deny employment violates Title VII depends on whether it is part of a claim of employment discrimination based on race, religion, sex or national origin.”

For the rest of the article, click here.

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Last week, I came home to a fresh layer of asphalt throughout our development.  Smooth. Warm. Black.  It looked great!  Then my kids ... 5 out of 6 of them ... pulled out the chalk and began destroying this perfect surface. 

Since their daddy represents road builders, they even created their own lanes of traffic.  I am sure they did not get any environmental impact studies.  Nor did they properly carry out lane closures.  (...amateurs...)

My immediate reaction was to get mad ... They were playing in the street! They were ruining perfectly good asphalt.  But then the quiet voice reassured me.  They are kids ... and they are going to be alright.  

Do you get stressed by juggling professional demands and family life?  Here are some reasons why you should let your kids plays on new asphalt:

• Let your kids be kids.  Too often, I confuse "good behavior" with "good character."  I think my job as a parent is to instill good character, which naturally should result in good behavior. Right?  But when my focus is on their actions, rather than their heart, I become rule-driven.  Wake up, Matt, they are kids.  Let them play!  That's what new asphalt is for ... bright colored chalk!
• Let yourself be a kid.  My job as parent does not end with allowing my kids to play, though.  I need to play with them.  In this instance, I flopped down on the new, black street and began drawing.  The giggles of the little ones at my side, laughing at my "less than perfect" stick figure was all I needed.  This was fun.  
• Live one life.  Most of my hurdles over the past ten years have stemmed from that fact that I tried to compartmentalize every aspect of my daily life (i.e., work, health, family, friendships, etc). Each had their own little box. Until I came to the realization that there is only room for one life, there was conflict.  I suspect that you will experience the same.  That means, if you are a passionate executive, then take that passion home to your family.  If you work great with your kids, then work great with your staff and employees.

Are you juggling work and family and community?  What tips can you share about finding the right balance?

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As reported in the Nashville Business Journal and News Channel 5 (video), a non-discrimination bill passed on a second reading at Metro Council last week.  The council voted 21 to 16 in favor of the bill that would add two new classes to the procurement code Metro contractors already follow. These companies would not be able to discriminate on the basis of gender identity and sexual orientation if it passes.  

A copy of the non-discrimination bill can be found here.  The bill must pass a third and final reading at the next council meeting set for March 15, 2011.  As reported, Mayor Karl Dean said that he would sign the bill into law.  According to The Tennessean, more than 181 other communities across the country have adopted similar policies.

What does the proposal mean to contractors?  If the legislation is passed on the final reading, contractors and suppliers who work with Nashville would have to offer workplace protections for homosexuals and transgender individuals.  In its simplest terms, contractors who do business with Metro would be required to add gender identity and sexual orientation to their non-discrimination policies.  In addition, the parties' contract must include an affidavit of compliance, which should be part of the bid documents.  The law reads:

The purchasing agent of the metropolitan government shall include in all bid specifications or invitations to bid a provision to the effect that no contract shall be entered into for building and construction projects or supplies or services unless the successful bidder submits an affidavit to the metropolitan government stating that by his employment policy, standards and practices he does not subscribe to any personnel policy which permits or allows for the promotion, demotion, employment, dismissal or laying off of any individual due to this race, creed, color, national origin, age, sex, gender identity, or sexual orientation, and that he is not in violation of and will not violate any applicable laws concerning the employment of individuals with disabilities.

As amended, the law excludes businesses with less than 15 employees and it does not not apply to religious institutions.

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A headline from the Wall Street Journal caught my attention this morning: "When People Come and Go: Project teams often have different workers at different times. And that can create problems." Imagine the potential problems that exist in an industry where project team members change regularly such as in the construction industry.

What does history report on labor in the construction industry?  According to the U.S. Department of Labor | Bureau of Labor Statistics, the "contract construction field is very competitive" and the "rate of business turnover is high" in the managerial occupations.   While the career guide contains some outstanding historical data on the industry as a whole, recent trends contradict the some of the growth forecasts by the BLS. 

Does turnover affect your project management teams?  According to the WSJ article, you should be asking yourself the following questions:

1. Are you constantly shuffling people on and off your teams?
2. Do new team members take a long time to get up to speed?
3. Are long term team members dissatisfied with training new team members?
4. Is your group performing as well as they should?

If you answered "Yes" to any of the above questions, then you have an opportunity to make some changes within your project management structure.  Here are some suggestions from the WSJ article:

• Create cohesion by teaming responsibilities.  It is hard to build a sense of identification with a team if turnover is high.  However, workers identify with other employees and managers who perform the same type of work. 
• Strengthen commitment by building motivation.  "Team members who spend only a short time in the group often lack commitment to the task and the group," writes Gervase Bushe, professor of leadership and organization development.  Providing clearer communication, targeting job satisfaction, increasing job responsibility are more than buzz phrases ... they can often make the difference in employee commitment.
• Foster a mindset of shared thinking. Over time, effective project management teams develop a common way of thinking about a project, including ways about approaching the work or communicating with employees.  With turnover, it is hard to develop and maintain a shared approach.  Consider creating a "Best Practices Protocol" for each particular team.

Question: What project management tips do you recommend to deal with turnover?

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Last week, I attended the Nashville Chamber of Commerce CEO Speaker Series featuring Colin Reed, Chairman and CEO of Gaylord Entertainment.  Reed is a very good speaker and he spent the morning with an audience of 200 sharing some lessons he learned following the flood in Nashville in May 2010.  If you have not seen the pictures of the water that overtook the Gaylord Opryland hotel, then click here.

Reed did not show up last week to tout his leadership abilities.  But if you listened carefully, you learned a few lessons in leadership when faced with an emergency.  These include:

• The time for creating an emergency plan is not during the emergency.  There are going to be obvious and not-so-obvious things to do before an emergency occurs.  One of the most obvious preparations that can be done is to prepare an emergency manual that outlines the potential "events" and "responses."   As a developer or contractor, you can prepare a manual that outlines how your company and employees should respond to a work site accident involving a fatality, or unusually severe weather, or other "unexpected" event.
• Build the "right" culture of leaders, management and employees.  For Reed, this meant being purposeful in getting "the right people on the bus" or finding competent leadership.  It also meant creating an environment where the workforce loves their work and the customers they serve!  Just like the hotel industry is based upon customer service and satisfaction, so too is your construction company, property management group, or banking institution.
• Communication has to be direct and honest during an emergency.  Reed and his staff learned that some of the information being reported about the status of the flood was flawed.  In one communication, he heard that the river was rising and that they had problems.  In another communication, he heard that water levels had ceased and he did not have to worry.  The lesson for Reed: "You cannot rely 100% on the information given to you."  But the lesson was also equally clear that the information that his company had to report needed to be direct and honest in all respects.  Some of the guests were not happy to have been evacuated late in the evening on Sunday night. When Gaylord reported that the hotel lobby was six feet underwater, Reed said, "You could have heard a pin drop.  It was at that moment these customers realized that this was, indeed, really serious."  
• Out of chaos comes opportunity.  This was perhaps Reed's best advice, commenting: "We are a better company because of what we went through."  The chaos of the flood and the more than $20 million in renovations have given Gaylord an opportunity to be a stronger and more successful company.  Although more than 1,700 employees were laid off, it gave Reed and his leadership an opportunity to do the right thing by offering severance pay and three months of health care.  Many of those employees look forward to the coming months as the company begins to rehire up to 80% of its former employees.

Reed concluded that if Gaylord didn’t have the right plans, adequate resources and amazing people during this crises, things would have been wholly different.  Gaylord intends to spend millions to celebrate its re-opening in style in November.

Image: mas90guru

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You may have noticed that I recently transitioned to a new law firm this week.  I am happy to announce that I have joined Stites & Harbison PLLC as a partner in the Construction Service Group and the Green Law Practice Group.  The past few weeks have seemed like a tropical storm ... and the only thing to do is ride the waves of change.

What do I mean by riding the waves of change?  As a construction attorney for the past ten years, I have realized that the industry is always in a state of flux.  During strong economic times, I have a lot more contract drafting and project administration work.  During hard economic times, I have a lot more construction litigation and mechanic's liens.  I've learned to adjust to the circumstances to meet the needs of my clients.

Whether you are dealing with a new safety policy on the site,  a difficult personality on the design team, an estimate error that is going to affect the bottom line, or even a potential transition to a new job, here are a few things you can do to ride the waves of change:

• Understand that change is going to happen.  Whether you are talking about your professional career or your personal life, there will be change.  You can count on it.  I can guarantee it.  Most of the time, those people who fail to recognize change have the hardest time adjusting to it.
•  Understand that change and your responses will come in stages.  Consider a fatal workplace accident.  Undoubtedly, your construction company will go through numerous changes in response to this incident, including the initial shock of the accident, feelings of potential guilt, assessment of safety measures, analysis of liability, and the transition of duties and potential change in policies.  Change of any sort comes in stages.
• Understand that communication leads to success.  Communications is always important, but it is especially important when you face change.   Practically speaking, you need as much information about the change as possible, so that you can make an intelligent decision. Talk to your boss, your boss’s boss, and your co-workers to get their understanding of the situation. Be honest in all your discussions and deal with the problems when they arise.
• Understand that flexibility is good.  Change requires flexibility and the ability to adapt.  The better able you are to respond to change, the more likely you will succeed. Make an assessment of the situation, identify potential outcomes, plan and develop a response strategy, and then begin to ride the wave.  Maybe your current job isn't what you expect?  Perhaps the new workplace policy strains the ingenuity of your employees? Try to be flexible with an understanding of the potential outcomes.  Part of the fear of change often involves dealing with the unknown.

In my situation, communication and flexibility on everyone's part has enabled a good transition.  I am sad to leave such a well-respected practice in Nashville.  However, by joining one of the oldest law practices in the nation and among the largest law firms in the Southeast region, I am thrilled at the opportunity to help build one of the strongest construction groups in the Southeast.  I will miss all my former colleagues ... but who knows ... I may see them in court!

 Image: Michael Dawes

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Earlier this week, I was talking with fellow attorney who does not practice construction law.  At one point in our conversation, he threw out a goocher of a question: "I know this is a hard question, but what do you think causes most of the disputes on a construction project?  I am sure there could be plenty of reasons for lawsuits, but are there some more to blame than others?"

Wow!  That is a hard one ... particularly because there could be so many different reasons for disputes on a construction project.  Here were my top three reaspons for disputes: 

1. Problems with the contract.  The written (or unwritten) contract is what guides the parties' expectations as to payment and performance.  The contract must clearly identify the rights and obligations of each player in the process, from developer, to designer, to contractor, to subcontractor and supplier.  More problems occur because an incomplete, vague or ambiguous "Scope of Work" in the agreement. A well-written contract that properly analyzes and allocates the risk on the project will often save heartache at the time of completion.
2. Problems with the people.  It is no secret that successful companies are driven by successful people.  The opposite is true as well: failing companies suffer from poor management and leadership.  When "people" are responsible for building "things,"  you have to realize that those "people" can cause problems during the construction process, whether you are talking about a loan officer, a design team, a project manager or supply deliveryman.
3. Problems with the unknown.  This is what I would call the "catch-all" category, as disputes often arise from events beyond one or more of the parties' control.  This woud include anything from unusually severe weather, to labor strikes, to differeing site conditions.  These "causes" often involve requests by the contractor for more time and/or money.

If you had to answer my colleague's question, what would you say?

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The construction industry is one of the hardest hit in this down economy.  From the top to the bottom, from executive to business development and sales to project management, you may find that you have to dust off your resume to look for new opportunities. 

An article by Joann Lubin in the Wall Street Journal yesterday highlighted a networking pro, George Landis, who had to learn some new tricks as his executive job ended last November.  Landis was described as a "deft conventional networker" who once relied on the traditional handshake.  Times are changing ... and Landis realized it.  He agreed to learn networking in the 21st century. Here are the top tips from his informal advisors, as well as a few of my comments:

• Develop a stronger online identity by revamping your resume.  For Landis, this meant changing his work summary from "a seasoned executive" to "I make sick companies significantly better for owners and employees."  From my perspective, it is also good to create an electronic version of your resume that contains hyperlinks to your work experience, notable projects, published articles and speaking gigs. (Here is an example of my electronic resume.)
• Make better use of LinkedIn, a professional networking website.  For Landis, this meant reviving his inactive LinkedIn account.  You may already have hundreds of contacts in your old, dingy address book.  Now's a good time to search those contacts for their online presence.
• Create a more visible personal brand.  For Landis, this meant finding a new way to position himself as a thought leader in business management.  For the construction player, this means finding opportunities to speak and write.  There are local associations like AGC of Middle Tennessee that enjoy new faces at their lunches. You are also bound to find a local educational institution like MTSU that has a concrete management program that always needs guest lecturers. 
• Get a bigger payoff from industry events.  For Landis, this meant joining the Turnaround Management Association and offering to assist in program development.  When you participate in the event organization, your start to become known as a good helper and volunteer.  Your name recognition and reputation builds.

At the executive and business development level, some of these tips may be easier to do than at the project management level.  But I think it comes back to identifying your passion and making that your job.  Former-construction-attorney-turned-marketing-coach Cordell Parvin shares 5 Keys to Success and Fulfillment and the second one is about finding your major definite purpose.  Perhaps your current circumstances allow you to look for new opportunities. And remember, you may be like Landis in your archaic networking ways, but even a pro can learn new tricks.

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Seth Godin is the bestselling author of ten books on topics about marketing, the spread of ideas and managing both customers and employees with respect.  This week, Seth released an e-book, a FREE DOWN-LOADABLE BOOK, that addresses some exciting ideas for the new year. 

Why is this important for the construction industry?  Just download the book and find some of the following nuggets of encouragement and advice for the new year:

• Seth Godin (blogger and speaker): "...the more you give the more you get..."  Seth speaks of the importance of generosity in our lives.
• Howard Mann (entrepreneur and author): "They do business through personal relationships, by delivering great customer service and it's working for them."  Howard suggests that you stay connected and build personal relationships, which does not always  mean that you Tweet or blog more.
• Michael Hyatt (CEO of Thomas Nelson Publishing): "When times are tough, vision is the first casualty. Before conditions can improve, it is the first thing we must recover."  Michael highlights that vision is the lifeblood of any organization.

Are you being generous in your business?  Are you investing in personal relationships?  Do you have the vision that your company needs to get you through these difficult times? 

Some of the most successful construction business owners I know are also some of the most generous people that I know.  Even if they are not blogging, Twittering, or Facebooking, they know how to build personal relationships with their clients.  They also treat their employees well and they have the ability to stand at the helm of their company, encouraging their people through the tough times.  Are you doing the same?

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