Compliance with Child Labor Laws

The U.S. Department of Labor’s (DOL) Wage and Hour Division mandates that employers comply with the youth employment provisions of the Fair Labor Standards Act (FLSA) and the implementing regulations of 29 CFR Part 570. These provisions are designed to protect young workers by restricting the types of jobs that they perform and the number of hours they work. The DOL strives to educate teens, parents, educators and employers on the federal youth employment rules in order to promote positive and safe work experiences. The following self-assessment tool is designed to identify some of the most common problems encountered regarding young workers. If you answer “yes” to any of the following questions, you are likely not in compliance with federal regulations.

Do any workers under 18 years of age do the following:

• Drive or serve as an outside helper on any motor vehicle (including but not limited to automobiles, trucks, golf carts, etc.) on a public road or highway?

Minors under 18 generally may not drive any type of motor vehicle or work as an outside helper on public roads or highways. This prohibition extends to the towing of vehicles and the driving of school buses and trucks. There is a limited exception to this provision that permits 17-year-olds to drive an automobile or truck (gross vehicle weight not exceeding 6,000 pounds) for limited periods of time when certain conditions are met. These conditions include that the minors possess a valid license, the driving is only during daylight hours, the driving does not involve urgent time sensitive deliveries such as delivering a pizza to a residence, and the driving is only occasional and incidental to their employment. There are additional requirements that also must be met.

• Operate, set-up, adjust, repair, oil or clean any power-driven woodworking machine or perform any off-bearing from circular saws or from guillotine-action veneer clippers?

Minors under 18 may not operate, set-up, adjust, repair, oil or clean any power-driven wood-working machines, including chain saws, nailing machines and sanders. They also may not perform any off-bearing activities from circular saws or from guillotine-action veneer clippers or feed (or help feed) materials into the machines. A limited exception applies to 16- and 17-year olds that allows them to place materials on a moving chain or in a hopper or slide for automatic feeding. The regulations also provide a limited exemption for apprentices and student-learners who are at least 16 years of age and enrolled in approved programs.

• Perform any activities that involve exposure to radioactive substances or to ionizing radiation?

Minors under 18 may not be employed in occupations that would expose them to radioactive substances and to ionizing radiations.

• Operate or assist to operate, set-up, adjust, repair, oil or clean any power-driven circular saws, bandsaws, guillotine shears, chain saws, reciprocating saws, wood chippers or abrasive cutting discs?

Minors under 18 may not operate, assist to operate, set-up, adjust, repair, oil or clean circular saws, band saws or guillotine shears, except machines equipped with full automatic feed and ejection. These same minors may not operate, assist to operate, set-up, adjust, repair, oil or clean chain saws, reciprocating saws, wood chippers, or abrasive cutting discs. These prohibitions apply regardless of the materials being processed (wood, concrete, metal, foam rubber, cake, paper, etc.). The regulations also provide a limited exemption for apprentices and student-learners who are at least 16 years of age and enrolled in approved programs.

• Work in any occupation in roofing operations or perform any work on or about a roof?

Minors under 18 may not be employed in roofing operations, including work performed on the ground and removal of the old roof, and all work on or about a roof. This prohibition includes any work that would require the youth to be on or near the roof at any time. The regulations provide a limited exemption for apprentices and student-learners who are at least 16 years of age and enrolled in approved programs.

Do any workers under 16 years of age do the following:

• Work during schools hours?

Minors 14 and 15-years old may not work during school hours. School hours are determined by the local public school in the area where the minor is residing while so employed, even if the minor does not attend the public school (i.e., attends a private school or is home schooled). Such minors may be employed outside of school hours with certain limitations. The term outside school hours means such periods as before and after school hours, holidays, summer vacations, Sundays, or any other day or part of a day when the public school district where the minor reside while employed is not in session.

• Work before 7:00 a.m. on any day?

Minors 14 and 15-years old may not be employed before 7:00 a.m. on any day.

• Work past 7:00 p.m. between Labor Day and May 31st?

Minors 14 and 15-years old may not be employed past 7:00 p.m. from the day after Labor Day through May 31. This applies even if there is not school the next day, such as Friday or Saturday night, as well as in weeks when school is not in session such as during spring break. These same minors may not work past 9:00 p.m. between June 1 and Labor Day.

• Work past 9:00 p.m. between June 1 and Labor Day?

Minors 14 and 15-years old may not be employed past 9:00 p.m. between June 1 and Labor Day. They may not work past 7:00 p.m. between the day after Labor Day and May 31.

• Work more than 3 hours on a school day, including Fridays?

Minors 14 and 15-years old may not work more than 3 hours on a school day, including Fridays. This prohibition applies even if there is not school the next day.

• Work more than 8 hours on any day?

Minors 14 and 15-years old may work up to 8 hours a day on Saturdays and Sundays and on other days when school is not in session, as long as they do not exceed the maximum permissible hours in any workweek. They may work up to 18 hours in any week school is in session and up to 40 hours in any week school does not meet.

• Work more than 18 hours in any week when school is in session?

Minors 14 and 15-years old may not work more than 18 hours a week when school is in session. For these purposes, school is in session in any week in which school meets, even if it meets for a part of a day or a portion of the week. School hours and school weeks are determined by the local public school where the minor would attend if he or she attended public school.

• Work more than 40 hours in any week when school is not in session?

Minors 14 and 15-years old may not work more than 40 hours in a week when school is not in session. They may not work more than 18 hours in a week when school meets. For these purposes, school is in session in any week in which school meets, even if it meets for a part of a day or a portion of the week. School hours and school weeks are determined by the local public school where the minor would attend if he or she attended public school.

• Operate any power-driven machinery, other than office machines?

Minors 14 and 15-years old may not operate most power-driven machinery, including lawnmowers, trimmers, and “weed-whackers”. These minors may operate office machinery, vacuum cleaners, floor waxers, and machines and devices used in connection with preparing and serving food and beverages, such as dishwashers, toasters, popcorn poppers, milk shake blenders, coffee grinders and microwave ovens that do not have the capacity to warm above 140°F.

• Ride as a passenger in a motor vehicle (other than public transportation) as part of the job?

The child labor rules allow 14- and 15-year-olds to ride inside the passenger compartment of a motor vehicle, but not when a significant reason for the minor being a passenger in the vehicle is for the purpose of performing work in connection with the transporting of, or assisting in the transporting of, other persons or property. As the transporting of, or assisting in the transporting of, other persons or property need only be a significant reason for the minor being in the vehicle and not the primary reason, permissible trips are fairly limited. When such youth are permitted to ride in the passenger compartment, each youth must have his or her own seat in the passenger compartment; each seat must be equipped with a seat belt or similar restraining device, and the employer must advise each passenger that such seat belts or devises are to be used. Fourteen- and 15-year-olds may never be employed as helpers on motor vehicles.

• Work in occupations in connection with construction (including repair)?

Minors 14 and 15-years old may not be employed in any construction activities or on a construction site. A limited exception would apply for office or sales work when not performed at the actual construction site.

• Work inside a freezer or meat cooler?

Minors 14 and 15-years old are prohibited from working in freezers and meat coolers. This includes duties such as taking inventory or performing cleanup work which would require them to enter and remain in coolers or freezers for prolonged durations. These minors may enter freezers momentarily —but not meat coolers—to retrieve items.

• Perform any work in or about boiler or engine rooms?

Minors 14 and 15-years old may not perform any work in or about boiler or engine rooms.

• Perform any work in connection with maintenance or repair of the establishment, machines or equipment?

Minors 14 and 15-years old may not perform any work in connection with maintenance or repair of the establishment, machines or equipment.

• Perform any work requiring the use of ladders, scaffolds or their substitutes?

Minors 14 and 15-years old may not perform work requiring the use of ladders, scaffolds, or their substitutes.

• Perform any outside window washing that involves working from sills?

Minors 14 and 15-years old may not perform outside window washing that involves working from sills, ladders, or scaffolds.

• Cook?

Fourteen- and 15-year-olds may perform only that cooking that (1) involves the use of electric and gas grills that do not entail cooking over an open flame and (2) involves the use of deep fat fryers which are equipped with and utilize devices which automatically raise and lower the “baskets” but not pressurized fryers.

• Bake?

Minors under 16 years of age are prohibited from performing any baking duties. Prohibited baking duties include the weighing, mixing and assembling of ingredients and the operation of pizza ovens and convection ovens. The use of warming devices to maintain the heat of cooked food is permitted.

• Load or unload goods from a truck, railroad car or conveyor?

Minors 14 and 15-years old may not load or unload goods to and from conveyors, trucks, railroad cars or tanks, trucks, boats, planes, or other mean of transportation. See 29 CFR § 570.33 and Child Labor Bulletin 101. Such minors may load onto motor vehicles and unload from motor vehicles the light, non-power-driven, hand tools and personal protective equipment that the minor will use as part of his or her employment at the work site, and the personal items such as a back pack, a lunch box, or a coat that the minor is permitted to take to the work site.

• Operate any hoisting equipment, including such equipment as scissor lifts, motorized hand trucks, forklifts, or grocery cart retrieval systems and cart caddies?

Minors 14 and 15-years old may not perform work involving the operation or tending or hoisting equipment—whether power-driven or operated manually or by gravity. Such equipment includes forklifts, scissor lifts, motorized hand trucks, patient lifts, winches, cart caddies, or QuicKart (used to move large strings of shopping carts from the parking lot to the front of the store).

Are any of your employees under 14 years of age?

Minors 13 years of age and younger are generally too young for employment under the Federal child labor provisions. Permissible employment for such minors is limited to exempt work such as delivering newspapers, performing casual babysitting, acting, performing minor chores around private homes, and working for a parent who is the sole owner of a business (in occupations other than mining, manufacturing, or anything prohibited by an HO).

• Do you fail to maintain a record providing proof of age for all employees under 19 years of age?

Employers are required to maintain and preserve certain records, including the date of birth for all employees who are less than 19 years of age.

Employers may protect themselves from unintentional violation of the child labor provisions by keeping on file an employment or age certificate for each minor employed to show that the minor is the minimum age for the job. Although the Wage and Hour Division no longer issues age certificates, certificates issued under most state laws are acceptable for purposes of the FLSA.

Source: DOL

Understanding Construction Contracts

Construction contracts can contain terms that impact your company’s bottom line. Reviewing them carefully prior to signing is indispensable, and can save your company time and money. This contract review guide is meant to be a starting point for reviewing contracts in general. It highlights some common contract terms and their potential impact. You can begin to understand which terms are most often negotiated in contracts generally. Then, with the help of licensed inside or outside counsel, analyze the commercial risks associated with construction contracts in depth and understand terms and conditions to protect your company’s assets.

Scope of the Agreement

Examine the definition of services to be provided to ensure the language is clear enough for an unrelated third party to understand the scope. The contract should include a time frame for completion of services. The rights and obligations of both parties should be clearly outlined. Any mechanism for changing the scope of the contract, as well as any of the terms, if allowed, should also be outlined within the contract.

Terms of Payment

Terms of payment should be clearly listed within the contract so that the expectations of both parties are clear. The contract should specify the agreed payment schedule for goods received. 

Warranties

There are two types of warranties: express and implied. Both types are assurances regarding particular issues, such as performance. 

Express warranties are those that are defined specifically in the contract. Implied warranties are based in statutory and/or common law, depending upon your jurisdiction. They are two-fold: a warranty of merchantability, which requires that goods/services must reasonably conform to an ordinary buyer’s standards, and a warranty of fitness for a particular purpose, which states that if a seller knows the intended purpose for the product or service, the act of selling the product to that customer implies that it is fit for that purpose. 

Be aware of warranty disclaimers and understand how the disclaimer limits your statutory rights. If it disclaims all warranties, express and implied, then you will likely be limited to the remedies in the contract for issues related to things like performance. You should also examine any disclaimer in the context of the contract. While it may require you to disclaim your statutory rights, other contract language may give you adequate rights and remedies regarding the points about which you are most concerned.

Damages, Limits of Liability and Indemnification

These three items are often in close proximity to one another in a contract, as they are interrelated. Damages may be defined as certain types of losses that could create liability under the contract. A limit on liability would restrict the amount of damages that a party would be required to pay if found liable for such damages. Sometimes this may also include a limit for indemnification.

Indemnification provisions allocate risk and cost between the parties. It is important to examine whether the party assuming the risk is the party with the most control over that risk. For instance, when a company’s employees are required to work at a customer’s location, the company is often asked to release the customer from all liability relating to the employees presence at the customer’s location.

In some cases, indemnification is limited to negligence or to a specific dollar amount, under a heading of “limits of liability.” 

Insurance

Some contracts will contain minimum bodily injury and property damage liability coverage amounts that the party must possess and also may require that the customer is added as an additional insured on those coverages. 

Prior to consenting to any contract, it is prudent to examine insurance coverage against the amount of liability exposure in a particular contract.

Terms and Conditions

• Governing Law & Jurisdiction – Look at the governing law provision to make sure that you are comfortable with the implications of the state law chosen by the drafter. This can impact the interpretation of the contract from warranties to indemnification.  Additionally, when specific statutes or regulations are referenced in the body of a contract, it is as though that statute or regulation is wholly contained within the contract itself. It is vital to read and understand that language prior to giving your consent. This happens regularly in government contracting situations.
• Dispute Resolution – This is another clause with which you must be comfortable with the laws of the state or forum chosen by the drafter. The rules chosen to govern dispute resolution can impact the outcome. Additionally, you should consider whether dispute resolution is right for your situation.
• Intellectual Property – When you are disclosing and/or licensing your company’s intellectual property, be it trademarks, copyrights or patents, it is important to include a clause that recognizes the owner of such intellectual property and affirmatively states that the agreement does not transfer any rights.
• Standard of Care – A standard of care clause may appear in certain types of contracts. The standard of care that is provided by the law should provide the minimum standard of care for the provision of services under the contract.
• Term/Termination – The contract should provide both parties with the right to terminate the contract. The situations in which termination is allowed will vary from contract to contract. Some contracts will allow the right to terminate in cases of dissatisfaction; others will allow it with a specific notice, for no cause. It is important that you contemplate in what cases you would want the right to terminate the contract. There should also be language defining the term of the contract. Does it have a finite term? Does it automatically renew each period?
• Right to Cure – Related to termination, some contracts will contain a right to cure clause. This would give the defaulting party notice of a breach and a finite period of time in which to remedy such breach. 

Standard Form Contracts

Unlike other industries, construction lacks a consistent set of laws like the Uniform Commercial Code or a federal statutory scheme. Contracts produced by professional and trade associations for architects (American Institute of Architects), engineers (Engineers Joint Contract Documents Committee) and commercial contractors (Associated General Contractors of America) can serve as important references and benchmarks when drafting a new contract. They are a good source of industry best practices, and using them can greatly reduce drafting and review time, meaning lower overall transaction costs for your company.

For all of their advantages, there are several things that you should be cautious about when using standard form contracts. Note the following cautions about standard forms before using them.

• Standard forms, which are written broadly to encompass many different contexts, require transaction-specific and jurisdiction-specific modifications. For example, certain states require that indemnities be written in a certain way.
• Changes made to one part of the document, such as definitions of words or terms, may affect other parts that make reference to it.
• Custom-drafted and industry-drafted forms are often incompatible. Even industry-drafted forms from different publishers can be incompatible.
• Standard forms always contain the bias of the drafter. Use this bias; know when to use various standard forms published by different industry organizations.

General Understanding

Reviewing general terms and features of construction contracts will help you grasp the consequences of its terms and conditions for your business. In any case, to ensure its completeness and accuracy, it is necessary to submit each contract you must sign to legal review.

Ground-fault Protection for Construction Sites

According to the National Institute of Safety and Health, the most frequently cited Occupational Safety and Health Administration (OSHA) electrical violation is improper grounding of equipment or circuits. This is especially troubling for construction managers in light of the fact that construction workers suffer more electrical burns and fatal electrical injuries than workers in all other industries combined. Each incident carries significant costs in terms of lost time and resources and increases the employer’s risk of costly lawsuits. The most tragic aspect is that many of these accidents could have been prevented with the implementation of proper ground-fault protection practices.

OSHA Regulations

OSHA requires employers to provide either: (a) ground fault circuit interrupters (GFCIs) on construction sites for receptacle outlets in use and not part of the permanent wiring of the building or structure; or (b) a scheduled and recorded Assured Equipment Grounding Conductor Program (AEGCP), covering all cord sets, receptacles not part of the permanent wiring of the building, and equipment connected by cord and plug.

About GFCIs

Grounding a tool or electrical system involves creating a low-resistance electrical path that connects to the earth. A ground-fault occurs in a tool or electrical system when there is a break in this low-resistance grounding path. The electrical current may then take an alternative path to the ground through the user, resulting in serious injuries or death. GFCIs automatically limit or stop the flow of current in the event of a ground fault, overload or short circuit in the wiring system. They operate by monitoring the amount of current going into electric equipment and the amount of current flowing out along the circuit conductors. If the difference exceeds 5 milliamperes, the device automatically shuts off the power to prevent injury.

About AEGCPs

The OSHA-approved alternative to using GFCIs on a construction site is an AEGCP, which is a regimented system for testing electrical tools and extension cords to assure their proper grounding. If an AEGCP is used in place of GFCIs for ground-fault protection, the following minimum requirements apply:

• Keep a written description of the program at the jobsite. Outline specific procedures for the required equipment inspections, tests and test schedule, and make them available to OSHA and to affected persons upon demand.
• Designate one or more competent persons to implement the program. OSHA defines a competent person as someone who is a) qualified to identify hazards and b) authorized to take prompt corrective measures.
• Visually inspect all cord sets, attachment caps, plugs and receptacles, and any equipment connected by cord and plug, before use each day. If you see any external damage, such as deformed or missing pins, damaged insulation, etc., or discover internal damage, take the equipment out of use until it is repaired.
• Perform two OSHA-required tests on all electrical equipment: a continuity test, and a terminal connection test. 

These tests are required:

• Before first use
• After any repairs, and before placing back in service
• After suspected damage, and before returning to use
• Every 3 months

Maintain a written record of the required tests, identifying all equipment that passed the test and the last date it was tested (or the testing interval). Like the program description, make it available to OSHA inspectors and affected persons upon demand.

Using GFCIs in Conjunction with AEGCPs

Although OSHA permits the use of an AEGCP in lieu of GFCIs, it would be a mistake to view the choice as strictly an either/or proposition. The best course of action is to use GFCIs in conjunction with an Assured Equipment Grounding Conductor Program. Taking this step will not eliminate the possibility of a costly electrical accident on the worksite, but it will significantly reduce the risk of injury or death due to ground faults.

For more risk management tips, contact Naught-Naught Agency at 573-634-2727.

Source: OSHA

A Word to the Wise about Construction Defects: What You Can Do to Protect Your Business

Possibly no two words strike more fear in the hearts of architects, engineers and contractors than “construction defect.” A claim for construction defect can cost astronomical amounts to correct and defend. And then there’s the damage to your reputation and its impact on your future opportunities for work. It’s enough to break a business.

Construction Defect Risks

Today, your risk of becoming involved in a construction defect claim is greater than ever. New technology, materials and applications have changed the way commercial buildings, homes and condominiums are constructed.

Advances are enabling the design and construction of buildings that are more attractive and less costly. Yet, many of these advances have yet to be tested in real application over time, where problems may be uncovered that were never anticipated in the lab. 

At the same time, new applications require new skills from contractors, who may overlook important requirements for installation or take shortcuts that cause devastating consequences. When problems occur, it’s hard to know the cause without investigation, and everyone on the project is forced to become involved. Fingers point. Often, whoever has the deepest pockets or the most to lose becomes the primary target for plaintiff lawyers. Fairly or not, you could be left holding the bag for others’ mistakes.

Let’s consider two of the most costly recent examples of construction defect, EIFS and FRT plywood:

EIFS

Architects love to design using EIFS (exterior insulation finishing systems.) EIFS cladding systems resemble stucco, but are less costly to install and can be fashioned into a variety of architectural shapes, including soft curves and geometric designs. This unique flexibility makes EIFS treatments ideal for special elements such as porticos, archways, ornate overheads for windows, doors and decorative trim.

As with any exterior cladding, water can enter behind or around the system. Early applications often lacked drainage features more commonly used today. With no place to go, constant exposure to moisture can cause rot in wood and damage to other materials within the building or home. Moisture-related problems led to an avalanche of individual and class action lawsuits by consumers.

Are you using EIFS in your designs? If so, strict adherence to guidelines for materials and methods of application is your best defense against a construction defect claim. 

FRT Plywood

Back in the early 1990s, FRT, or flame resistant plywood, was touted as an alternative to fire walls in multi-unit buildings. It appeared to be a revolutionary product and was quickly adopted by architects and builders, especially in the Northeast. But high temperatures in attics caused early and unexpected deterioration of the material. Suppliers went Chapter 11, and builders were left to face clients with major defects in their buildings, condominiums and homes.

What new building materials are you using in your projects? Have you done your research? How confident are you in the manufacturer and the testing? Are you comfortable with the risk?

Types of Construction Defects

Generally, courts categorize construction defects in one of four categories:

1.     Design deficiencies typically relate to building designs that do not meet code or perform to standard.  

2.     Material deficiencies occur when use of inferior materials causes significant problems, such as when windows leak or fail to perform even when properly installed.

3.     Construction deficiencies are problems created by poor quality workmanship.

4.     Subsurface deficiencies usually involve cracked foundations or other structural damage caused when soil is not properly compacted and prepared for adequate drainage.

The goal of the court is to determine fault and damages, and require the party responsible for the defect to remedy the situation.

Insurance

Under the standard commercial general liability (CGL) policy, your insurance company has a duty to defend you for construction defect claims if any damages are potentially covered under the policy. Coverage for construction defect only exists if there is an “occurrence” under the policy.

If the court finds against you and you are a subcontractor, the policy will frequently pay for property damage caused by the occurrence. It does not, however, cover the costs to remedy your work – the faulty workmanship or material that led to the damage. In many cases, the cost to correct the construction defect will be greater than the actual property damages incurred. Keep in mind that if you are a general contractor, the whole project is your work. 

Architects and engineers will want to consider the additional protection of a professional liability policy. Professional liability provides coverage when a design does not function as anticipated or promised. Ask Naught-Naught Agency for details.

What You Can Do to Manage Your Risk

Many risks you face are not typically covered by insurance. In addition to insurance, you can reduce your risk in two ways:

1.     Transferring Risk

You can transfer some of your risk to a responsible third party. General contractors transfer risk to the subcontractors they use on a construction project through indemnification and hold harmless agreements as well as additional insured requirements in their construction contracts.

Indemnification and hold harmless agreements are typically included in standard construction contracts. Keep in mind that if the subcontractor lacks the financial resources to meet its obligations, you still could be obligated for any construction defect claims. That’s why it is important to check the financials of your subcontractors and choose wisely. And never under any circumstances use uninsured subcontractors. They put you at great risk and could increase the cost of your own insurance. 

Whenever you hire subcontractors, have them add your business to their liability policy as an additional insured. You will be protected by the subcontractor’s policy for work the subcontractor does for you, up to the policy limits. It’s a good idea to require liability limits of at least $1 million on the subcontractor’s policy. 

Always request coverage as an additional insured on a primary basis. This way, you assure that their insurance responds first to a claim. (Your insurance becomes excess coverage and responds only if the judgment exceeds the subcontractor’s policy limits.) Be sure to specify the length of time you will be added to the policy for completed operations. Construction defects often come to light long after a job is completed. You can verify coverage by requesting a copy of the certificate of insurance on an annual basis. 

2.     Risk Control

The best way to avoid a construction defect claim is through quality construction. Work only with architects, engineers and contractors who have good reputations and a track record of performance. Don’t cut corners. Plan and perform work in the correct sequence and with proper supervision. Be sure to document any and all plan changes. Organized records are critical to your defense. 

Rely on Our Construction Expertise

The legal landscape for the construction industry is complicated and changing. In today’s legal climate, customers who are dissatisfied with work are increasingly resorting to litigation. The recommendations here are a starting point for understanding and avoiding construction defect claims. Sleep better at night by consulting Naught-Naught Agency and your attorney. They are experts in their professions as you are in yours. Both will bring you good advice and recommendations, and make them partners with your business.

Article by Gregg Gaughran, Executive, Commercial & Specialty Lines for Westfield Insurance. Mr. Gaughran is a 25+-year insurance industry veteran. Westfield Insurance is a major regional insurance company headquartered in Ohio and one of the leading insurers of contractors in the state. Westfield Insurance is a Trusted Choice® member company.