Dive Brief:
- Although the recent National Labor Relations Board ruling — which states that companies can be held equally responsible for labor violations committed by their contractors — was not based on a case in the construction industry, homebuilders are expressing their dissatisfaction with the decision.
- Builders have said the new labor law puts them at risk for problems stemming from the work of subcontractors — which are a pivotal part of a construction business. The NLRB ruled that, in some cases, subcontractors can be considered "joint employees" of their employers.
- The National Association of Home Builders and the Associated Builders and Contractors each issued statements opposing the ruling. "If this ruling is allowed to stand, it will cripple small businesses across the country, including the home building industry as it is in its fragile recovery," NAHB Chairman Tom Woods said.
Dive Insight:
Because the case involved a waste management firm — not a construction company directly — it is still unclear how exactly the decision will affect builders. But if a case involving a construction company does end up court, as many expect, builders have vowed to fight the ruling.
Wilma Liebman, a former chairman of the NLRB, told CNBC: "It obviously depends on the facts of each case, but in the construction industry in particular, these kinds of relationships have been in place for decades, and so even before the test tightened in the 1980s not every contracting relationship in the building industry was considered a joint employer."
The NLRB decision, if applied as many builders fear, would have major implications for an industry that relies heavily on subs for various jobs, from electrical work to roofing.
"Contractors may find themselves vulnerable to increased liability making them less likely to hire subcontractors, most of whom are small businesses, to work on projects," ABC Vice President of Government Affairs Geoff Burr said.
