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Homeowners face huge risks hiring illegal non compliant contractors

Posted by Mark Paskell on Sat, Jan 22, 2011 @ 03:36 PM
  
  
  
  
  

Homeowners, looking for the cheapest price are hiring illegal contractors at an alarming rate. Homeowners read and listen to the news and think that they can beat up any contractor to get a cheap price. Consumers are more inclined today to take a chance on the lowest price (which comes with the risk that the contractor is not playing by the rules) due to our current economic climate. They are willing to believe the cheap price will still get them a great job from desperate contractors. 

The old cliche that you usually get what you pay for seems to be less important even to many of today's affluent consumers.

OSHA             EPA          State fo Massachusetts

New Risks Homeowners Have New Clue About; OSHA, EPA, and State Enforcement of Residential Contractors

For the first time the Residential Construction Industry is the focus of aggressive government regulation. Government agencies are setting the stage to bring the residential contractor into  compliance with OSHA regulations and EPA RRP practices. In addition many states have formed task forces to go after the the underground community. The goal is to insure that businesses pay employees above the table, properly classify them and pay for workmen's compensation coverage, pay unemployment insurance coverage, contribute to Social Security and Medicare, payroll taxes and ensure a level playing field for legitimate businesses.

Why does this pose a risk for the homeowner who hires an illegal contractor? 

Well consider this scenario; Homeowner in Natick, Massachusetts hires a contractor to renovate a kitchen and porch on a home built in 1926. The homeowner gets 7 bids and hires the lowest one. The contractor hired is licensed and said he is insured. The homeowner believes him. The contractor tells the homeowner to get the permit. The contractor is small he only has two workers. He is not EPA RRP or Mass RRP certified. He knows little about OSHA. He has no knowledge of the Mass RRP Lead Law or OSHA requirements regarding keeping the worksite safe for workers. In addition, the contractor knows nothing or claims to know nothing about the OSHA Fall Protection Standard that will be enforced starting 6/14/2011.

Residential Construction Industry; Targeted by OSHA

OSHA has hired many new inspectors. The new directive from the head of OSHA in Washington is to go out and stop by all residential job sites. Look for violations and penalize accordingly.

Simultaneously the Mass DOS, who has been approved to hire a new RRP enforcer, starts their enforcement program in earnest in the spring of 2011.

At the same time, the Department of Labor Underground task force is aggressively going after residential contractors. They seek those who mis classify their workers, don't have workmen's compensation, pay their workers as subs but claim that they are independent contractors, don't contribute to payroll taxes and unemployment insurance.

Now all three agencies decide to go out together for a 5 day sweep of Metrowest towns. (Note; Shawn McCadden and I were told in person by OSHA and Mass DOS officials that they are going to work together at the OSHA/DOS workshop in Amherst).

So they come upon the Natick project. They see the dumpster in the driveway and stop in to say hello. Demo has begun on the porch and kitchen. There are no signs warning about the dangers of lead. There are no barriers set up to keep people out. Their is a worker standing on the top of the step ladder as they arrive. A roofer is on the porch roof with no fall protection. There is a pile of debris from the kitchen thrown on the lawn with no plastic down and no cover.

There is a fan in the kitchen window blowing dust out. There are two guys inside with N100 respirators on and sledge hammers going to town.

This is going to be a very bad day for the contractor. He will be cited by OSHA for failure to comply with the OSHA respirator standard. He will be cited for not following the fall protection standard requiring fall protection in place for anything over 6 feet. He will be cited for the improper use of a ladder. 

He will be cited by DOS for working without a lead license, failure to provide a renovate right brochure, failure to set up exterior containment and signage, failure to close of all windows and doors, blowing dust out of the demolition area and not having a job log log. 

Next he will be asked by the Department of Labor inspector about workmen's compensation. The contractor says they are fully insured. The inspector pulls out his laptop and logs in to the state database to confirm coverage, there is none. The DOL inspector immediately issues a stop work order. The job stops. OSHA also issues a stop work order and tells the contractor no more work unless you have the right staging in place. DOS says I want you to get your guys tested for lead poisoning and stop work until everything is set up in compliance with the Mass DOS RRP Lead Rule.

So yes, the contractor is having a bad day. Now he cannot work on the site until he clears up all his issues. In addition he doesn't have the capital to fix his non compliant issues. He leave the job. Goes home that night and figures out he is all done, OUT OF BUSINESS.

Now the homeowner is going to have a real bad day, in fact a whole bunch of them.

Don't think that this can't happen? Many contractors are deciding to say the heck with the RRP Lead Law. Their costs are lower. Homeowners are taking a huge risk hiring the underground contractor.

In the end you usually get what you paid for.

mark the coach

mark the coach

Contractor Business Coaching    Design/Build Training

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Comments

About the only positive thing that legitimate contractors can do is to make it part of their sales and marketing process to make it clear WHY they cost more. Where homeowners DELIBERATELY make a choice based on price alone, I submit that they'd probably be lousy customers to have anyway. Again, this is where EPA's failure to raise public awareness about the dangers of lead poisoning creates problems for ignorant homeowners (health risk), unscrupulous and/or ignorant contractors (health risk plus risk of losing their business), and compliant contractors (playing field tilted to the advantage of the unscrupulous or unprofessional "competition"). There's been a lot of justifiable complaining about the EPA's public awareness shortcomings. However, I also feel that the construction/remodeling industries have fallen down on the job of public education. Going back to the anecdote, Mark, if the cheap-o homeowner had decided to do the tear-out himself and had that self-same fan blowing lead dust onto his neighbor’s property, what would be the penalty – if any?
Posted @ Monday, January 24, 2011 8:03 AM by Melanie Hodgdon
The homeowner will receive no penalty. 
They can create a mess and even poison themselves and their family with no penalties from the EPA. 
As far as the construction industry is concerned no question we have not sufficiently educated the consumer. However the reality in this market is that many consumers, even well to do ones, are more willing to opt for the lower price. I would like to believe that that is not the case however recent history from well established contractors is proving otherwise. There is a new willingness amongst consumers to roll the dice to save money by hiring lower cost contractors. The factors leading to this willingness may change but are factors none the less. Consumers now are using their own money to renovate versus having the luxury of using equity loans in the past.  
There are some consumers who will shun hiring the low ball contractor. But based on what I am being told by long established firms, well to do consumers have lowered their standards and are more willing to bring on the lower guy. This recent willingness means contractors really need to be on top of their sales and marketing game. Visits to win jobs have increased and customers know they can keep calling to get the price they want. Today's contractor must have a compelling reason to move consumers focus from price to solving the problem and need with their service.
Posted @ Monday, January 24, 2011 9:59 AM by Mark Paskell
Interesting. So if my neighbor remodels on his own and fills my yard with blown out, lead-containing dust, my only potential option would be a civil lawsuit. I agree that homeowners who have to foot the bill themselves instead of getting a loan are more likely to opt for the cheaper contractor. I can also see people deciding to take the money they saved by going low ball and taking off to Barbados for the duration of the project. There's no doubt that doing things right is costly. It's cheaper to dump industrial waste into rivers. It's cheaper to belch toxic gases into the atmosphere. But it has been easier to regulate those kinds of issues since factories and the like are pretty easy to identify and test. The literally hundreds of thousands if not millions of small remodeling projects conducted every day will be much harder to monitor, and contractors and homeowners (both strapped for cash) will naturally be tempted to try their luck flying under the radar.
Posted @ Tuesday, January 25, 2011 7:18 AM by Melanie Hodgdon
Wouldn't it make sense to fine the property owner for allowing workers on thier properties who are not certified? It's fairly easy to verify at least licensing in any state. it takes two to complete a contract so why isn't a property owner just as guilty as the person caught working with out proper credentials?
Posted @ Monday, March 28, 2011 9:02 PM by randy
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