6 rules and regulations for remodelers to watch in 2012

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If it seems like every year there are more regulations and restrictions to worry about in your business, it’s not your imagination.

It’s a reality that government at the federal, state and local level continues to put more rules in place. The National Federation of Independent Businesses estimates more than 4,000 new laws and regulations that will affect small businesses will take effect this year.

While many of them come from a good idea — protecting children from lead poisoning, for instance — it doesn’t change the fact that it just makes it tougher to do business.

Here’s an update on existing rules and what you need to know about them in 2012, as well as new regulations on the horizon.

Lead paint

2012 should be a busier year for enforcement and inspections under the EPA’s Lead Renovation, Repair & Painting (RRP) rule that took effect in 2010.

(Lack of enforcement has been a major concern for those following the rules — see our reader survey [1].)

Don Lott, of EPA’s Office of Enforcement and Compliance Assurance, said in a recent NAHB webinar that EPA receives 400 tips a month about unsafe practices or uncertified firms and has conducted more than 1,000 compliance inspections. 2012 will be much busier, Lott said. At this point, the EPA is relying mostly on tips to prompt inspections.

“I think EPA expects the remodeling community to police itself in this matter, which means they expect guys to turn guys in who are uncertified,” NAHB Policy Analyst Matt Watkins told Professional Remodeler.

The agency can conduct onsite jobsite inspections, as well as audit records going back three years. Record audits seem to be more common, so remodelers need to make sure they are keeping all their paperwork up to date, Watkins says.

That includes signed acknowledgement that the homeowner received the “Renovate Right” pamphlet, records that show what uncertified and certified workers were on a project and what lead-safe practices were followed and post-renovation acknowledgement from the homeowner of the work performed. If a company conducts tests or brings in a third-party inspector, it should keep not only the results, but also detailed information about the test, down to the brand and serial number.

“It’s critical they understand what records they are required to keep so when EPA shows up they’ve got a representative snapshot of what they did while they were out on the project,” Watkins says.

So far, 12 states have taken over administration of the rule from EPA, adding a layer of complications in those jurisdictions. Some states have already ramped up enforcement on their own (see Industry News on p. 16). Other states that have proposed taking over enforcement have thus far not done so, but that could change as state legislatures go back into session this spring, Watkins says.

OSHA Fall Protection standard

Like the lead paint rules, this one’s been on the horizon for quite a while. Back in 1994, the federal Occupational Safety and Health Administration set out requirements that anyone working 6 feet or more above the ground needed to have fall protection.

At that time, the residential construction industry argued that it needed more flexibility than the rule allowed and OSHA issued an “interim” guidance that allowed residential construction companies to use alternative procedures for safety. That policy was rescinded in 2010 and the original regulation is now being fully enforced.

So what does that mean for remodelers?

The required fall protection can consist of guardrail systems, safety net systems or personal fall arrest systems (body harness, with lanyard, anchor point, etc.). If a company can demonstrate that following the standard would make the site more dangerous or it is otherwise infeasible, it can create a plan using alternate methods, such as warning lines or slide guards. That alternate plan, though, must be put in writing and be on file for OSHA inspections.

Even if you sub out all your roofing work, it could cause problems for your company. As with other OSHA rules, general contractors can also be cited for violations by trade contractors.

NAHB has put together a resource guide at www.nahb.org/fallprotection [2], while OSHA’s guidance can be found at http://1.usa.gov/zviFow [3].

Collective bargaining rights

Starting April 30, any businesses with more than $500,000 in gross business volume are required to post a notice notifying employees of their collective bargaining rights. The notice is required to be 11 x 17 inches and can be downloaded from the National Labor Relations Board website at www.nlrb.gov/poster [4].

The poster must be “posted in a conspicuous place, where other notifications of workplace rights and employer rules and policies are posted,” the NLRB says. Failure to post the notice is considered a violation of unfair labor practices laws.

Subcontractors vs. employees

While it’s not a new rule, several states have joined a partnership with the U.S. Department of Labor to crack down on firms that misclassify employees as contractors in order to save on taxes and other associated costs.

At the same time, the IRS has been hiring more auditors and the expectation is that they will increase enforcement efforts. The difference between a contractor and an employee basically boils down to how much control the company has over the individual and how the perform their work. The IRS provides three “common law” factors to look at:

• Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
• Financial: Are the business aspects of the worker’s job controlled by the payer? (How the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
• Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

The IRS is currently offering the Voluntary Classification Settlement Program, an amnesty program that allows employers to reclassify contractors as employees for future tax periods and pay only 10 percent of the back taxes due and avoid other penalties and audits. (Note that this amnesty program won’t necessarily protect you from any action at the state level.)

Restricted background checks and credit reports

Many remodelers run background checks on job applicants as part of the hiring procedures. If you usually include running credit reports as part of that process, make sure you’re not in violation of state laws. Although federal law still allows it, seven states — California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington — have already banned the practice except in limited instances, and at least 14 more states are considering a similar restriction.

No increased 1099s

It’s not all bad – the requirement scheduled to take effect this year that would have seriously ratcheted up the number of 1099s companies had to issue was scrapped by Congress. The rules would have required more paperwork for most small businesses, with companies required to file 1099s for any individual or company they do more than $600 of business with in a given year.

Small business advocates had said the requirement would cost small businesses thousands of dollars a year in extra time and labor to track and file the extra 1099 forms. The requirement was an attempt to collect an estimated $22 billion in taxes on unreported income to help fund the Patient Protection and Affordable Care Act healthcare reform package.