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IC vs. employee update: As enforcement heats up, flooring dealers need to be vigilant

January 22/29, 2018: Volume 33, Issue 6

By Ken Ryan

 

The debate over the misclassification of employees—treating them as independent contractors instead of employees—became a hot-button issue during the Obama administration after the U.S. Department of Labor (DOL) issued new guidance that potentially put some flooring dealers at risk for the way they use subcontractor installers.

Fast forward to 2018 and a Republican administration and GOP-led Congress are calling the shots. Is the coast clear? Not exactly. While there have been some tweaks to the interpretation of language, the fact remains the law still exists and all flooring businesses need to be careful.

Jeff King, counsel to the World Floor Covering Association (WFCA) and author of “The Independent Contractor,” said his ongoing message to specialty flooring dealers is to be vigilant. “I want to emphasize the continuing importance of complying with the independent contractor rules,” King told FCNews. In late December, King noted an administrative law judge at the National Labor Relations Board (NLRB) ruled misclassification of an independent contractor is an unfair labor practice under the National Labor Relations Act.  “This is an issue that will continue to confound flooring dealers and contractors until a single basic standard is developed,” he surmised.

New developments
In June 2017, U.S. Secretary of Labor Alexander Acosta announced the “withdrawal” of the U.S. DOL’s 2015 and 2016 informal guidance on independent contractors, essentially a relaxation of enforcement. The Obama-approved independent contractor “interpretation” (issued July 2015) discouraged the misclassification of employees as independent contractors. This interpretation also caused deep concern among many business owners who used independent contractors.

In response to Acosta, David Weill, who served as the administrator of the Wage and Hour Division of the U.S. Department of Labor under Obama, said from a practical perspective, “removing the guidance will change nothing in terms of employer responsibilities—the law is still the law. But it did potentially signal an intention to move away from addressing worker misclassification as a fundamental problem worth addressing. That is disturbing.”

However, despite Acosta’s move, others say the withdrawal is unlikely to significantly change the legal landscape because the issue is now handled mostly in a growing number of private class-action lawsuits and state unemployment insurance audits and proceedings—not by the U.S. DOL.

In July, legislation was introduced to protect the independence of independent contractors. U.S. Sen. John Thune (R-S.D.), a member of the tax-writing Senate Finance Committee, introduced the New Economy Works to Guarantee Independence and Growth (NEW GIG) Act, or S. 1549. This legislation creates a safe harbor for those who meet a set of objective tests that would qualify them as an independent contractor, both for income and employment tax purposes. “Today’s fast-growing gig economy has made it easier for people to offer unique services like home repair and cleaning, child care, food delivery or ride sharing through easy-to-use mobile applications that can be opened with a simple swipe of a finger,” Thune said. “While these gig economy companies have created thousands of new jobs, they’ve also faced new challenges when it comes to how the service providers are classified by the IRS. My legislation would provide clear rules so these freelance-style workers can work as independent contractors with the peace of mind that their tax status will be respected by the IRS.”

The safe harbor focuses on three areas that are intended to demonstrate the independence of the service provider (IC) from the service recipient and/or the payer based on objective criteria rather than a subjective facts-and-circumstances analysis:

  1. The relationship between the parties (e.g., job-by-job arrangement, the service provider incurs his own business expenses, the service provider is not tied to a single service recipient);
  2. The location of the services or the means by which the services are provided (e.g., the service provider has his own place of business, does not work exclusively at the service provider’s location, provides his own tools and supplies); and
  3. A written contract (e.g., stating the independent contractor relationship, acknowledging that the service provider is responsible for his own taxes, providing the service recipient’s reporting and withholding obligations).

In the meantime, enforcement continues. The California Labor Commissioner’s Office recently ordered Oakland-based Attic Pros, an attic cleaning company, to pay more than $3.5 million in back wages and penalties for misclassifying 119 workers as independent contractors. The agency said investigators found that Attic Pros’ employees worked 10 to 14 hours per day up to six days a week and were paid a daily rate regardless of the actual number of hours worked, thus putting their earnings below minimum wage.

“There are so many abuses of it,” King said, citing other cases such as Uber, Lyft, Menards and FedEx. (FedEx Ground Package System agreed to pay drivers in 20 states $240 million to settle lawsuits claiming the second-largest U.S. parcel delivery company misclassified them as independent contractors.)

Despite encouragement from the WFCA/CFI for flooring dealers to either employ their installers or hire a third-party firm to do the work, King said they have not seen “big movement” on the part of specialty dealers to progress in either direction. There remain many “mixed” models where the same retailer uses both employee installers and subcontractors. King advises these dealers to call them “sub” and not “independent contractors” and to make sure the subs have employee ID numbers and are registered as an independent business.

King believes the IC issue is not going away, no matter who occupies the White House or which party controls Congress.

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Target Estimating assists contractors with net quantity calculations

Screen Shot 2017-10-30 at 4.40.59 PMSt. Petersburg, Fla.—Target Estimating aims to make determining net quantities faster, more affordable and more accurate for flooring contractors. The company was created by Skip Bendig, a flooring contractor of 15 years.

Target Estimating uses Estimate All, a software program developed by Safe Harbor, to complete all of its net quantity requests. The program was designed specifically for flooring and can handle all aspects of net quantity estimating.

“I started the company in August of last year,” Bendig said. “I can do any take off as long as I know the materials.”

As a seasoned flooring contractor, Bendig also knows what to look for when estimating net quantities. This includes transitions which are often left out of requests, he explained.

Target Estimating software takes on jobs of all sizes—nothing is too large or too small, according to Bendig. Most projects are completed in under two days and are completed at a rate that won’t break the bank.

The company’s client list is available upon request.

For more information, visit targetestimatingllc.com.

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Bostik extends warranty for wood flooring adhesives

Bostik_Logo_STD_M_4C_PWauwatosa, Wis.—Bostik has announced that two of its industry-leading wood flooring adhesives will now be offering a lifetime warranty for unlimited moisture vapor protection.

“We are going to take Bostik’s Best to unlimited moisture vapor protection for all engineered hardwood installations, and move the duration of the warranty from 10 years to lifetime of the flooring,” explained Eric Kurtz, market manager – hardwood installation systems, Bostik. “Vapor-Lock will also offer this same unlimited protection for not only engineered hardwood flooring installations but solid projects as well.”

The company aims to make installations easier for contactors who don’t want to test a slab for moisture vapor emission rates or in-situ RH, according to Kurtz. “After being used as the leading brand of adhesive for the installation of millions of square feet of hardwood in the most challenging conditions, we have the track record to prove our ability to protect hardwood flooring from these extreme substrate conditions. Contractors and owners can confidently depend on Bostik’s Best and Vapor-Lock to live up to these new levels of performance.”

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INSTALL, H2H celebrate one year of partnership

INSTALL_H2H_Vet ImageGlassboro, N.J.—In April 2016, INSTALL and Helmets to Hardhats (H2H) forged a partnership calling on INSTALL contractors to sponsor veterans with the goal of bringing new skilled workers into the floor covering industry through apprenticeships. The partnership has since been actively recruiting veterans in both the U.S. and Canada and has seen tremendous results and surpassed expectations.

At the outset of the partnership INSTALL and H2H set a goal of enrolling at least one veteran into the INSTALL apprenticeship program per month, a total of nine vets for 2016. Since then, INSTALL has surpassed the goal, placing 19 veterans. Due to the program’s overwhelming success, INSTALL will shoot for securing 36 H2H sponsorships in the next year. Currently, more than 100 vets have shown interest in an apprenticeship and the company is actively working to connect them to contractors for possible career opportunities throughout the next year.

H2H operates in both the U.S. and Canada with two complimentary, but independent programs that connect National Guard, Reserve, retired and transitioning active-duty military service members with skilled training and quality career opportunities in the construction industry. The program is designed to help military service members successfully transition back into civilian life by offering them the means to secure a quality profession in the construction industry.

Veterans are able to apply to the program year-round and INSTALL is helping them succeed in all stages of the program, from application to completion. Taylor Thompson, an H2H vet in his first year of the program, said he is receiving the most professional training he has ever experienced. Before entering the program Thompson worked as a residential flooring installer, so he is no stranger to the industry. “Anyone can claim that they know how to install flooring, but no one does it like INSTALL. I choose the H2H program to establish a career path and become the best at what I do by training with the best. So far, the training is unrivaled.”

INSTALL contractors looking to support this partnership must commit to sponsoring a veteran in the INSTALL apprenticeship program and hiring him or her. For this commitment, contractors will be recognized as partners of Helmets to Hardhats. Once a contractor has committed to the program by contacting Install, H2H will match the company with potential candidates for the position. Flooring contractors interested in this program should contact John McGrath, INSTALL executive director.

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ProMat aims to ease specification process

March 27/April 3, 2017: Volume 31, Issue 21

By Lindsay Baillie

 

Screen Shot 2017-03-31 at 11.38.44 AMPro Material Solutions (ProMat) was created as a way for commercial contractors, designers and architects to manage product data for any given project. “We are simply a database for the industry,” said Jerry Freeman, IIDA, president of ProMat.

The company provides users with a plethora of tools including a project binder, a specification download button, a palette builder and a sample ordering tool—to name a few. By using these solutions, users can save time and money when looking for product specifications or manuals and when ordering samples.

According to Freeman, most of the contractor’s time is spent searching for product documents and ordering all of the samples. With ProMat, the company’s administrators search for and upload new products, along with specs, maintenance manuals and any other available information to the ProMat database. Once in the system, the product is available to all users and can be searched based on application, price, color, manufacturer and product type. Ordering a sample or requesting documents is as easy as clicking a button, the company stated.

Boasting the “world’s largest digital database of architectural products and materials,” ProMat is constantly being updated. “We have products for about 860 [flooring] manufacturers in our database,” Freeman said. “We can add an entire company within an hour.”

This efficiency is also seen in ProMat’s ability to create documents for a submitted project that include product specs, maintenance manuals, close-out reports, etc. While most documents are created within five minutes to an hour, the company guarantees 48 hours or less. “I don’t think any job has taken us more than six hours,” Freeman stated.

While there is no cost to join ProMat, only qualified commercial/residential interior designers and architects can request samples. In addition to membership, users are able to access the program’s multiple tools free of charge. According to Freeman, ProMat generates its revenue by charging a $30 flat fee for each project submitted by a user.

On the horizon
ProMat plans to launch Material Annex, a new platform to help manufacturers sell their overstock and discontinued products. The new program will also allow subcontractors to sell excess inventory from their warehouses. “We’re basically creating a web exchange,” Freeman explained.

Also in development is an app called Specifix, which uses a phone or tablet camera to show product in an actual room. Designed to interface with ProMat and Material Annex, the app uses the camera to scan a desired room and collect the room’s measurements. Then, in “paint-by-number” fashion, the desired flooring product is filled in to show what the room will look like.

Material Annex should be available to users by the end of the year. Specifix’s beta launch is scheduled for May 1 with a subsequent rollout on June 1.

For more information visit promatsolutions.com.

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FCICA doubles down on educational initiatives

March 13/20, 2017: Volume 31, Issue 20

By Ken Ryan

 

Screen Shot 2017-03-17 at 11.24.55 AMSan Antonio—FCICA, the flooring contractors association, commemorated its 35th annual convention here by refocusing on its principal values: education, training and enhancing the skill sets of its core constituency—the professional installation manager.

“From what I have seen over the last six years, I think this group is as healthy as it has ever been—not just financially but in terms of great member retention,” Mike Newberry, chairman of the FCICA, told FCNews. “There is a renewed commitment and energy here, and we have a laser focus.”

The FCICA’s flagship program, what Newberry calls the group’s “cornerstone,” is the Certified Installation Manager (CIM) program. This eight-module curriculum provides training tools and assessment for qualified professionals within the commercial flooring space. To date, 29 have successfully completed CIM and there are 102 currently enrolled in the program. In addition to technical issues, installation managers learn “soft skills” such as how to professionally handle irate customers and deal with other issues that require strong interpersonal skills.

James Bissler of Texan Floor Service, Houston, said he became CIM certified because he wanted to separate himself and his company from the competition. “I have certified installers so it made sense to take the next step.”

Newberry said there is strong momentum for the CIM program, which is in its third year. “Being a member is great, but when you have non-members who want to participate in the training program it says a lot about its value. Internally we feel CIM is the only program of its kind in flooring that is training the project/ installation manager, which is a term we use interchangeably.”

Kelly Fuller, director of education, said the CIM program has information installation managers cannot find anywhere else. Best of all, it is all accessible online. “It is a program that is constantly evolving.”

The CIM emphasis comes at a time when the installation trade is being challenged on all fronts—from a dearth of qualified installers to the question of where and how to recruit the next generation of an aging workforce. Larry Chandler, commercial sales director for William M. Bird, a top 20 distributor, is chairman of the FCICA’s Member Benefits committee. He told members that educational opportunities like CIM are imperative. “Margins are getting squeezed all the time that it is almost impossible to go back out on a job site for a second time [without losing money on the project]. The job needs to be done right the first time.”

Screen Shot 2017-03-17 at 11.26.16 AMThe focus on continuing education carried over to the vendor trade program where product demonstrations were included during and after the four-hour trade show that featured 48 vendors. “Any organization willing to promote more training, the better off we all are—and FCICA is big in this area,” said Daniel Tallman, strategic business manager for Schönox, who conducted a product demonstration of the company’s newest synthetic gypsum self-leveling product. “We are a big proponent of getting the proper knowledge in the hands of the people who are going to be handling our material.”

Cathy McVey, customer service manager for Ceramic Tool Flooring Transitions, said she appreciated the interaction with the flooring contractors. “They made a point to come by and visit with us. All you want is a little traffic, and we had plenty of that.”

On the rise

This year’s convention featured 42 first-time attendees and eight new associate members. FCICA now has 201 members—108 contractors and 73 associate members (mostly suppliers).

One first-time attendee, Greg Epperson, technical services manager for Chilewich, which supplies carpet tile, broadloom and carpet mats to the commercial trade, noted, “I have been to some shows where the contractors come around and barely show interest in you. Here the contractors have genuinely been interested in our products and their uses.”

Of the 154 people in attendance in San Antonio 24 were considered “successors,” those less than 40 years old. Graham Capobianco, chairman of the Successors Committee, said his group plans to hold successor-specific programs to spur membership and promote greater involvement within the organization. “We are trending upward with successor involvement,” he told members. “We want to grow with existing members first.”

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Fuse Alliance recognizes network members, suppliers at annual conference

Fuse_Member_Group_IMG_9848Laguna Niguel, Calif.—Fuse Alliance, a member-owned organization of professional, commercial flooring contractors, recently recognized the recipients of the network’s Member and Supplier Awards, at the organization’s 2017 annual conference in Austin, Texas. Fuse Alliance also announced the winners of its inaugural Spark Awards, presented to network members only.

Member Awards were presented to seven network businesses. OEC, based in Boise, Idaho, captured Excellence in Communication; Division 9, based in the Seattle area and Christian Brothers, based in the San Diego area both took home Excellence in Reporting and Follow-Up; three network members received Excellence in Loyalty, which included StarFloors of Dallas, Texan Floor Service of Houston and Franklin Flooring in Pennsylvania. ReSource Floors, based in San Diego, was recognized for its contribution to Ecollect—Fuse’s reclamation program. Finally, Resource 4 Floors, based in Ft. Lauderdale, received the Spirit Award.

Supplier Awards were presented to four of the network’s preferred suppliers. Johnsonite received Best Product; Armstrong Flooring received Best Service; Schönox received Best Support; and Ardex Americas captured Supplier of the Year.

The Spark Awards celebrate excellence in project design installed by its network members and is centered on flooring. Based on originality, quality of installation and design innovation, the awards represent outstanding craftsmanship, skill and expertise in the flooring industry.

Winners include: Butler Flooring Services, based in Louisville, Ky., captured three Spark Awards including Best Branded Environment, Best in Show and Most Maximized Budget. Commercial Interior Resources (CIR), based in Orange County, Calif., captured the Greatest Space Challenge. Floorz, based in Denver, captured two Spark Awards including The Most Aggressive Timeline/Schedule and the Best Flooring Solution. Signature Commercial Floor Covering received the Toughest Site Conditions.