Remodeling - February 2009 - (Page 21)

Section Editor: Stacey Freed sfreed@hanleywood.com Collaborative Effort Pairing up doubles your options ByLaw Independent contractor? W ant to cover more ground when finding leads? Work with competitors. That’s what Chris Newcomer and Michael Barto do. Each is the owner of a remodeling company — Prism Home Improvement & Restoration and Chelsea Enterprises, respectively — in Rochester, N.Y. The pair began partnering on projects several years ago. Although Barto’s strength is more constructionoriented than Newcomer’s, both do design work and both focus on historic restoration and renovation. They could be called competitors. But that hasn’t prevented them from collaborating. With their combined client bases, each has doubled his referrals, Newcomer says. “It’s a way to tackle the market with more resources.” F ollowing a growing trend across the U.S., a new law in Minnesota is designed to crack down on contractors who “misclassify” workers as 1099-based independent contractors. The law, which became effective Jan. 1, 2009, requires that independent contractors in the construction industry obtain a certificate from the Minnesota Department of Labor and Industry (MDLI). Without the certificate, Minnesota will classify the worker as an employee. That means the worker would be subject to the Minnesota laws, rules, and regulations that govern the employee/employer relationship, including workers’ compensation, unemployment insurance, wage and hour, and occupational safety and health. To obtain the certificate requires submitting a detailed application, paying a fee, providing supporting documents, and signing a sworn statement that the applicant meets a list of nine criteria that certify that he or she is a genuine independent contractor (see www.doli.state.mn.us/ic). Moreover, contractors who hire independent contractors must verify that the worker holds a current certificate, and certificates must be renewed every two years. SEEKING LEGAL COUNSEL The MDLI is authorized to impose a $5,000 fine for each violation of the law. A greater concern is the potential for increased litigation from the private sector when lawyers begin to realize that they can use this law as a jumping off point when representing workers in the construction industry against an employer. One saving grace is that if the contractor hires the worker through a business entity structure (such as hiring John Jones Installation Services Inc. instead of hiring John Jones the individual), then the Minnesota law should not apply. While no other state has yet adopted this type of law, many have moved or are moving aggressively toward making the structuring of an independent contractor relationship exceedingly difficult. Now more than ever, contractors should consult with legal counsel before wading into this area. —Kevin M. Tierney is an attorney with Johanson Berenson LLP (www .homeimprovementlaw.com), a national law firm specializing in the representation of contractors and the home improvement industry. He may be contacted at 703.759.1055 or info@johansonberenson.com. This article is for informational purposes only and should not be construed as legal advice. WE WANT TO HEAR FROM YOU! TAKING THE LEAD For each job on which they collaborate, one of the pair “owns” the project while the other acts as a trade partner. Newcomer says that he likes the arrangement “because you can have the resources you need between the two companies for any project you need to do.” In this kind of working relationship, however, it’s not just the owners who have to get along, the company cultures must mesh enough that the crews work well together. Although Prism Home Improvement & Restoration and Chelsea Enterprises each have different company structures and processes, Newcomer says that, provided the jobs are organized well, the field crews are able to work out any differences. Friends for many years, Newcomer and Barto don’t, however, want to create a single business entity. “It’s working well this way, and there’s no reason to go down that path,” Newcomer says. —S.F. remodelingmag.com Illustration: right, iStockphoto.com/Jesus Conde Do you have a question about a legal issue? E-mail bylaw@hanleywood.com Remodeling February 2009 21 http://www.doli.state.mn.us/ic http://www.homeimprovementlaw.com http://www.homeimprovementlaw.com http://www.iStockphoto.com/Jesus http://www.remodelingmag.com

Table of Contents Feed for the Digital Edition of Remodeling - February 2009

Remodeling - February 2009 Contents First Word Market Watch Linda Case Mark Richardson Shawn McCadden Ways + Means Bottom Line Sales + Marketing Field Notes By Design Tech@ Work Good Form Close Up Second Look Going Green Clinic Specbook Upscale Remodeling Start Right People, Process, Profits Interview: Sara Ryan Duffy, President of SRD International New + Notable Products Final Touch Green Speak Green Spec In Focus First Look Benchmark

Remodeling - February 2009

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