The vast majority of homebuilders rely on subcontractors. While larger public homebuilders do have specialty workers on their staff, a significant amount of the work still goes out to subcontractors. This is why builders from all across the nation are balking at a new labor law wherein the National Labor Relations Board (NLRB), in some cases, will now deem subcontractors as “joint employees”of homebuilders.
This means that builders may now be held responsible for for issues regarding millions of subcontractors. This includes plumbers, roofers, electricians and so on.
Tom Woods, chairman of the National Association of Home Builders (NAHB) said in a press release, “The homebuilding industry, which is primarily made up of small businesses who rely greatly on the work of subcontractors would overwhelmingly be harmed by the new standard.”
He added, “It will cripple small businesses across the country, including the homebuilding industry as it is in its fragile recovery.”
The NLRB however explains that the revised standard is designed “to better effectuate the purposes of the [Joint Employment] Act in the current economic landscape,”. The NLRB board further explains that the previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances.
The NLRB’s ruling was based on a case in another industry (Sanitation), so it remains to be seen exactly how it would apply to the builders.
“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,” said Wilma Liebman, a former chairman of the NLRB.
Builders are on high alert as to how this ruling will affect future construction related cases. Subcontractual relationships are an integral part of the industry and compliance will be an entirely complicated issue.
READ MORE ABOUT THE CASE IN DISCUSSION: NLRB Ruling Redefining ‘Employer’ Could Have Big Impact If It Stands