Understand the Reporting Change to Leases Before 2021 Ends

General Contractors Face New Liability Scrutiny for Wage Theft by Subcontractors

As a part of daily operations, most contractors have leased vehicles, buildings, trucks, construction equipment or other items to keep costs down and business running smoothly.

Did you know that, in a matter of months, your leases will be accounted for differently due to the new lease accounting standard?

 

While previously only capital leases were recorded on the balance sheet, effective for fiscal years beginning after December 15, 2021, all leases will be on the balance sheet. That translates to January 1, 2022 for calendar year entities, and fiscal 2023 for non-calendar year end entities. What does this mean moving forward? It means contractors need to make sure they have a thorough handle on all of their leases. Now is the time to review and evaluate contracts. 

New definition of a lease

The new definition under ASC 842 says, “a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.” This slight change means that all contracts should be evaluated to determine if they fall within the scope of this new criteria. Contracts that were previously considered leases may no longer meet the lease criteria and vice versa. Be mindful of lease language when you are reviewing your contracts. 

Two categories of leases

The leases formerly known as capital will now be called finance leases. The classification criteria remain essentially the same as under the existing standard; the only major difference is the elimination of the bright-line percentages. All leases that do not meet one of those criteria will be classified as operating.

If a lease contract includes a non-lease element, that non-lease component must be accounted for as a separate contract distinct from the lease itself. For example, the cost of an equipment lease that includes a maintenance contract must be allocated between the two elements and accounted for separately.

Lease liabilities for operating and finance leases will all be accounted for in the liability section the same way capital leases currently are: split between current and long-term. The offset to the liability will be a right of use (ROU) asset. There will be two lines: a ROU asset – operating lease line, and a ROU asset – finance lease line. These ROU assets are all long-term. 

The new standard was designed so that there should be minimal impact to your income statement. Operating leases will continue to be recognized as a straight-line expense over the life of the lease. Finance leases will continue to be frontend loaded because the interest is higher at the beginning of the lease than at the end. 

Important impact

The most significant impact will be on the company’s current ratio. Because the ROU assets are all long-term but the lease liability is split between current and long-term, the current ratio will be negatively impacted. This change will be particularly important for entities with debt covenants that reference the current ratio. If you have significant operating leases that may create an issue with your debt covenants, connect with your bankers now and make sure that they are aware of the new standard. 

Key to know

Ultimately, it’s important that both the borrower and the lender understand that this is a reporting change, not a change in a company’s financial situation. Having this conversation early on instead of waiting until the last minute will avoid confusion, and a lot of headaches. If you’d like to get a head start so you aren’t scrambling to figure out the logistics once January arrives, the time to act is now.

The Hero Act Deadlines You Need to Know

The Hero Act Deadlines You Need to Know

Since COVID-19 entered our lives and disrupted our normal protocols, reassessing workplace safety has been on every employer’s mind, especially within hands-on industries like construction work.

In response to the pandemic, Governor Andrew Cuomo signed the New York Health and Essential Rights Act (NY HERO Act) into law on May 5, 2021, which mandates extensive new workplace health and safety protections. The goal? To protect employees against exposure and disease during a future airborne infectious disease outbreak.

While employers must adopt plans as required by the law, as of the date of this writing no designation has been made and plans are not required to be in effect until the New York State Commissioner of Health designates an airborne infectious disease as a highly contagious communicable disease that presents a serious risk of harm to the public health.

Under this new law, the New York State Department of Labor (NYS DOL), in consultation with the NYS Department of Health, has developed a new Airborne Infectious Disease Exposure Prevention Standard, a Model Airborne Infectious Disease Exposure Prevention Plan, and various industry-specific model plans for the prevention of airborne infectious disease. Employers can choose to adopt the applicable policy template/plan provided by NYS DOL or establish a different plan that meets or exceeds the standard’s minimum requirements. We highly recommend that employers opt to use the DOL authorized template to ensure there is no mystery or uncertainty surrounding compliance.

To comply with the HERO Act, it’s vitally important to keep employees in the loop and to stay aware of the latest NYS DOL information available. Right now it’s important for construction companies to:

  • Establish an Airborne Infectious Disease Exposure Prevention Plan by August 5, 2021,and post the plan at worksites and distribute the plan to all employees within 30 days after adoption, or by September 4, 2021, at the latest
  • Designate supervisory individual(s) responsible for enforcing the plan
  • Gather employee feedback to incorporate into the plan
  • Integrate the plan into the employee handbook

So, can your company face financial fines if it chooses not to adopt a plan within the timeframe?

Yes. Employers are subject to civil penalties of at least $50 per day for failure to adopt a plan, and not less than $1,000 or more than $10,000 for failure to abide by an activated plan. Repeat violations may result in increased penalties.

Are there any upcoming HERO Act deadlines to keep in mind?

Yes. It’s important to note that a second section of the HERO Act, effective November 1, 2021, allows employees to form a joint labor-management workplace safety committee. The committee must be comprised of both employer and employee designees, with at least two-thirds nonsupervisory employees who are chosen by nonsupervisory employees. The Act authorizes committees to:

  • Raise health and safety concerns, to which employers must respond
  • Review health and safety policies enacted in response to laws, executive orders, or guidance
  • Participate in government workplace site visits
  • Review employer-filed reports related to workplace health and safety
  • Meet quarterly during working hours for up to two hours
  • Allow committee members to attend a training, not to exceed four hours, on occupational health and safety and the function of worker safety committees

While the best approach may be to proactively form a safety committee by November 1, the Act does not require employers to establish a committee at this time but instead requires employers to allow employees to form such a committee.

THE DOL will likely publish future guidance on how to best communicate this information to employees. However, we advise all union employers to preemptively check their collective bargaining agreements to see if the safety committee requirements conflict, as the terms of the committees will most likely be subject to bargaining.

In summary, employers must be aware of several deadlines to protect their employees and avoid hefty violation fines.

Firstly, ensure you have distributed your company’s Airborne Infectious Disease Exposure Prevention Plan to employees no later than September 4, 2021, or face civil penalties. Designate supervisory individual(s) to conduct a verbal review of the plan in the event of an outbreak. Additionally, it’s a good idea to obtain and properly store personal protective equipment and other exposure controls in preparation for future infectious disease outbreaks. Lastly, consider establishing a joint labor-management safety committee by November 1, 2021. It’s also a best practice to closely monitor the NYDOL website as an updated status could trigger Prevention Plans to become effective. Don’t hesitate to act. This plan can be implemented with expert guidance.

When Will the Chip Shortage End?

When Will the Chip Shortage End?

Name a product, any product.

In 2021, the consumer expectation is that if you want something and you have the capital to pay for it, you can have it at your doorstep with literally, the touch of a button. The problem, however is that because of the COVID-19 pandemic, the expectation, and reality of manufacturing output capabilities are far from aligned. Every industry is being impacted by a global chip shortage that’s stretched on for several months. It’s affecting a variety of production, from how quickly we can drive a car off the lot or even buy a new laptop – and virtually every sector of our economy and every facet of our modern lives is powered by semiconductors. So when can manufacturers expect business to go back to normal? It seems that’s the key question on all of our minds these days, and unfortunately, major players weighing in on the matter don’t have the most promising news to deliver.

Since the spring of 2021, the White House has recognized the impact the chip shortage was having on the manufacturing industry as well as on American workers and families throughout the country.

A statement released by the White House back in April described the issue as a “top and immediate priority” for the President and his senior-most advisors on economic and national security. The White House heard directly from industry leaders on the impact of the chip shortage and discussed short and long-term approaches to address it. Participants emphasized the importance of improving transparency in the semiconductor supply chain to help mitigate current shortages and improving demand forecasting across the supply chain to help mitigate future challenges.

The U.S. government also discussed the importance of encouraging additional semiconductor manufacturing capacity in the United States to make sure we never again face shortages.

That’s why this summer, the U.S. passed a tech and manufacturing bill that includes $52 billion to fund semiconductor research, design, and manufacturing initiatives. The problem? Currently, it’s just not financially lucrative for companies here in the U.S. and more incentives are needed. In 1990, the US produced 37% of the world’s chip supply, according to a September 2020 report from the Semiconductor Industry Association. But now, the country is responsible for just 12% of global chip production. Seventy-five percent of the world’s chip manufacturing comes out of Asia, per the report, and China is positioned to become the largest chip producer by 2030. The reality remains: foreign governments offer more attractive financial incentives to construct semiconductor factories, like tax breaks and grants, so until that changes here in America, the likelihood is production will continue to soar overseas.

In an effort to measure the scope of the chip shortage, tech journalism outlet Recode reached out to nearly 30 companies that use, design, and make chips.

The extensive list of major players included General Motors, Qualcomm, and Hewlett-Packard to name a few. All of the companies that responded said they were affected by the shortage. The electronics maker Toshiba told Recode it’s stuck paying higher prices for components while Toyota said the company’s supply chain issues continue to affect production at its North American facilities. BSH, which makes Bosch appliances, said some products have lead times as long as six months. While companies are adapting in their own ways, most surveyed didn’t anticipate a resolution anytime soon. Instead, companies see the chip shortage as an industry-wide problem that could go unresolved until at least next year and quite possibly into 2023.

As other countries continue to invest in their own research and development, we cannot risk falling behind.

The bipartisan support of the tech and manufacturing bill is a promising commitment to ramping up American production and remaining competitive in the global market. But there is other exciting legislation on the horizon that could encourage domestic manufacturing. The Facilitating American-Built Semiconductors (FABS) Act is bipartisan legislation that if approved would create a 25 percent tax credit for investments in U.S. semiconductor manufacturing to boost domestic manufacturing of semiconductors and further the aim to stimulate domestic growth in that sector. While time will tell what the future holds, and as manufacturers and consumers wait on chip production, one thing is true. A combination of grants, tax credits, and research investments is needed to turbocharge future U.S. semiconductor production and innovation.

Sources: Semiconductors.org, White House

Breaking Ground: Casino Construction Coming Soon

Breaking Ground: Casino Construction Coming Soon

Remember when the highlight of your weekend was hitting the food court together with your friends at the mall? The number of malls in the U.S. grew more than twice as fast as the population between 1970 and 2015 but boy, have times changed. The crowds have faded, countless storefronts have shuttered, and now, malls across New York and much of the country are looking a lot less lively. The opening of the 5.6 million square foot Mall of America in 1992 might have looked like the continuation of an American staple, but in reality, right after that goliath opened, Amazon was born, and the Internet exploded. It was the beginning of the end of the mall era. In the US alone, we’re expecting to have 300 million online shoppers by 2023. Pre-pandemic statistics from 2020 indicate that 69% of Americans have shopped online, and 25% of Americans shop online at least once per month. With the reliance on digital shopping only exploding across demographics during the economic shutdown, there’s no doubt those numbers are growing. So what to do with all of the sprawling, commercial space our communities face? The town of Newburgh Planning Board has approved plans to repurpose the Newburgh Mall and it’s promising to bring hundreds of local jobs, and millions in local revenue.

As we’ve established, the coronavirus pandemic accelerated a demise that was already underway. Coresight Research estimates 25% of America’s roughly 1,000 malls will close over the next three to five years. Just last month, the town of Newburgh Planning Board approved plans to create Resorts World Hudson Valley inside the Newburgh Mall. The casino will feature 1,300 electronic games, a bar and lounge, and is expected to draw several new businesses to the mall that currently has 17 vacant storefronts. According to Meghan Taylor, Resorts World vice president for government affairs, the $32 million project will employ union labor. “This project would be creating 200 to 225 full-time jobs with an average annual salary of $74,000 a year including salary and benefits, the large majority of that being union employees from the Hotel Trade Council Union,” she said. “That would mean a total of almost $15.5 million in annual wages here in the Town of Newburgh.” The construction phase of the project will employ approximately 200 local union workers. Taylor said Resorts World, which also operates the $1 billion casino resort that opened near Monticello in 2018, would pay out $3 million annually as host fees to the Town of Newburgh and Orange County. The company has said construction could take six to 12 months, depending on whether pandemic-related shortages of building materials cause further delays. Last month, company representatives said they planned to start work at some point this summer and open the casino in the first three months of 2022. “We look forward to breaking ground soon and delivering on our commitment to create good-paying union jobs for local residents, help revitalize the Newburgh Mall, serve as an economic engine in the Hudson Valley, and begin generating revenue for New York State’s public schools,” Taylor said. Resorts World has projected the slot-like devices at its Newburgh casino will generate $160 million in gross gaming revenue, part of which goes to the state to spend on education. According to New York State Sen. James Skoufis who negotiated the deal to bring the gaming center to Orange County, this new addition to the community is a game-changer. “The mall has been around for many decades and it’s been on a steep decline for a while now and this changes the entire trajectory of that property,” he said of the project.

Ultimately, the redevelopment of properties within Hudson Valley could range from straightforward to complex, with an assortment of public-partnership arrangements or purely private redevelopment. Hopefully, the completion of this particular project will prompt more local economic redevelopment and additional workforce opportunities for local contractors. As with any project, working with local government and neighborhood residents throughout each phase of a project to meet zoning regulations and address neighborhood concerns would be essential to the success of future property conversion. Beyond the variety of services we perform for our clients at RBT, we aim to pass along useful, relevant information to help our communities succeed, grow and prosper. As we continue to dedicate time and resources to helping our construction clients achieve success, we look forward to connecting with you and your team.

Sources: CNBC, N12, Mid Hudson News, Forbes, Optin Monster, Times Herold Record

Go Green by Adding Additive Manufacturing

Go Green by Adding Additive Manufacturing

How many times a year does your company use the term optimization?

Likely, you aim to optimize your production, optimize your resources, and most importantly, optimize your profitability. The definition of optimization is the action of making the best or most effective use of a situation or resource. What if we told you that one of the greatest optimization pathways for manufacturing can be found by going green in 2021? We know that the term “going green” can often perpetuate concerns over upfront investment costs and experimental materials. And we get it – change is scary. But if sustainability is a goal for your company, the wonders of additive manufacturing (AM) might be the key you need to unlock new, exciting – and yes, green – business growth. Many are rethinking their manufacturing processes because of the various vulnerabilities this year exposed. For simpler supply chains and more scalable and resilient production, AM is an answer.

In a nutshell, additive manufacturing (also known as 3D printing) is a transformative approach to industrial production that enables the creation of lighter, stronger parts and systems.

It is yet another technological advancement made possible by the transition from analog to digital processes. In recent decades, communications, imaging, architecture, and engineering have all undergone their own digital revolutions. Now, AM can bring digital flexibility and efficiency to manufacturing operations. Additive manufacturing uses data computer-aided-design (CAD) software or 3D object scanners to direct hardware to deposit material, layer upon layer, in precise geometric shapes. As its name implies, additive manufacturing adds material to create an object. By contrast, when you create an object by traditional means, it is often necessary to remove material through milling, machining, carving, shaping, or other means.

The AM manufacturing method can usher in a new era of sustainability.

Additive manufacturing enables eco-friendly products, it provides for end-of-product-life-cycle solutions for eliminating waste and scrap, and it allows for resource-efficient material choices via recycling. Oak Ridge National Laboratory reports that 3D printing cuts down manufacturers’ use of raw materials by 90 percent, transforming manufacturing into a more efficient and less wasteful process. When you consider the various parts that can be built in a single print, significant cost savings can be passed on to re-invest in other innovations. The Fraunhofer Institute in Germany further reports in a recent study that metal fabrication of titanium parts using laser powder-bed additive emits approximately 70 percent less carbon dioxide than equivalent production by traditional milling processes. This finding is further reinforced by the Additive Manufacturer Green Trade Association that highlighted additive-enabled design saved, “so much fuel during flight lifetimes that they were a net environmental benefit” over conventional counterparts.

While the benefits are clear, we understand financial hurdles exist.

According to the Harvard Business Review, even before COVID-19, small businesses were continually facing dual challenges of banks’ reluctance to offer credit and prime contractors delaying payment. These challenges are resulting in cash shortages for upfront purchases manufacturers require to transition to acquire additive systems. Additionally, scaling up adoption will require workforce re-training to ensure U.S. manufacturing keeps pace with technology innovation. For more insight on how to help your business thrive and adapt, contact our Manufacturing Services Group today to schedule a brief conversation. Whatever the size of your venture, we can help you meet your immediate and long-term goals.

Sources: GE, Additive Manufacturing, National Defense Magazine

Modular Building Explosion: The Future of Construction?

Modular Building Explosion: The Future of Construction

From hospitals to multi-story apartment towers, to correctional facilities – modular construction is not a new concept, but it is having a moment in the sun, and it’s not just a passing trend. Why? Technological advancements, economic demands, and changing mindsets mean it is attracting a wave of interest and investment. As more varied material choices improve the aesthetics of prefab buildings, consumer perceptions are shifting and industry interest is growing. Here, we will explore the major benefits of focusing on modular construction, and dive into the statistics that might cause you to consider the same off-site construction concepts you fanned away in the past.

Over the next five years, the modular construction market is anticipated to rise at a considerable rate.

With the rising adoption of strategies by key players in 2021 alone, the market is already growing at such a steady rate that some industry experts say it will rise over the projected horizon. Under moderate assumptions of penetration, the market value for modular construction in new real-estate construction alone could reach $130 billion in Europe and the United States by 2030.

So, what are the top three major benefits your company needs to consider when thinking about going modular?

  • significant cost reduction
  • faster project timescales
  • higher quality

Some large housebuilders have already made significant investments in building manufacturing facilities – which would suggest that some believe the future of modular homebuilding is already here. The maturing of digital tools has radically changed the modular construction concept by facilitating the design of modules and optimizing delivery logistics. Recent modular projects have already established a solid track record of accelerating project timelines by 20 to 50 percent. In fact, according to the National Institute of Building Science, 71.4% of firms that committed to a modular construction project saw a noticeable difference in schedule advantages/speed to market. Using a repetitive building method in controlled conditions also allows for modular builders to have greater control over the quality of their structures. Fabricating modules within a controlled facility reduces the risk of losing materials due to inclement weather, being misplaced, or mismanaged.

What do you need to focus on if you’re considering investing yourself?

You need a model that focuses on standardization (think LEGO), logistics, inventory control, kitting, and bills of materials, manufacturing, and assembly, coupled with some traditional construction business practices, too. In short, the successful modular building model needs to be a hybrid business:

Manufacturing + Supply Chain and Logistics + Construction

Public-sector entities, like private-sector developers, will be able to capture cost savings and productivity benefits by taking a modular approach with any large-scale publicly funded projects that have repeatable elements, like school buildings and affordable housing. At the same time, the public sector has an additional role to play in facilitating modular adoption by modernizing building codes—which would remove barriers to build more housing. Approval processes can be streamlined and more efficient if product designs and production processes can be approved in factories rather than on each project site, reducing the on-site inspection burden to assembly verification.

According to the Modular Building Institute, 79% of General Contractors, 69% of Architects/Engineers, and 53% of Trade Contractors plan on utilizing a “relocatable modular structure” in at least one of their projects within the next two years. AT RBT, we pride ourselves on assisting construction professionals to build the most sustainable businesses you can with our comprehensive services. We understand that every contractor’s company plan is unique, and we aim to pass along useful, relevant information to help our communities succeed, grow and prosper. As we continue to dedicate time and resources to helping our construction clients achieve success, we look forward to connecting with you and your team.

Sources: MarketWatch, McKinsey & Company, ENR, PanelBuilt

Should Your Company Make Vaccinations Mandatory

Have you considered making COVID-19 vaccinations mandatory? If so, you’re not alone. Manufacturing workers have navigated uncertainty and unprecedented challenges since March 2020, even as most other sectors of the economy shut down completely or moved to remote employment. Although manufacturers cannot work from home, they are not currently included in the recently expanded list of eligible New York vaccination groups, prompting a growing number of industry leaders to create a petition to include essential manufacturing workers in the next group. Yet as the COVID-19 vaccine does gradually become more widely available, the scientific community did not foresee the next hurdle being vaccine resistance, but it’s the reality that’s setting in across the country. Polling data continues to show that a significant percentage of Americans prefer not to receive the COVID-19 vaccine – in fact, research from the Society for Human Resource Management (SHRM) found that 28% of U.S. workers are willing to lose their job rather than get vaccinated. The risk of unnecessary interruptions or delays in manufacturing due to increased COVID-19 infection in facilities is of great importance as it will directly impact not only New York state but the country. So, how do manufacturing industry leaders navigate this latest bump on the road to economic recovery? Read on for the latest guidance.

Can an employer make COVID-19 vaccinations mandatory for workers?

ANSWER: In December, the federal agency focused on workplace discrimination, the Equal Employment Opportunity Commission, said because the vaccination itself is not a medical examination, employers could make COVID-19 shots mandatory for their workers. Keep in mind that if employees have medical or religious reasons that prevent them from taking a coronavirus vaccine, employers could be legally required to give the workers some reasonable alternative to continue to work. Also, for employers with a unionized workforce, the employer must consider bargaining requirements before implementing a mandatory vaccine policy.

Can an employer ask an employee if he or she has already received the vaccine or require proof of vaccination?

ANSWER: Generally, yes. However, that inquiry can only be made, according to the EEOC, if the question is “job-related and consistent with business necessity” as provided under the ADA. To meet this job-relatedness standard, the employer will need to establish that the worker’s failure to be vaccinated would pose a “direct threat” to the well-being of that employee or others with whom the employee would have contact as part of his or her job duties.

Can an employer fire an employee who refuses to be vaccinated?

ANSWER: Possibly, in limited circumstances. The EEOC guidance reminds employers that it will need to make reasonable accommodations to employees seeking an exemption due to disability-related reasons or religious objections and will need to follow the established reasonable accommodation process under either the ADA or Title VII before taking any adverse employment actions. The EEOC cautions employers that if it can establish that an employee who is not vaccinated poses a direct threat (that cannot be accommodated without undue hardship), the employer can exclude the employee from the worksite, but the employer cannot terminate the employee without further consideration of the employee’s legal protections or other possible accommodation, including whether the employee can perform his or her job remotely.

President Biden recently moved up the timeline for vaccine allocation by ordering all states, tribes, and territories to make every U.S. adult eligible for the COVID-19 vaccines by May 1. According to New York State’s COVID-19 Vaccine Tracker, 13% of the population is currently completely vaccinated.

It is important to remember that the EEOC guidance is only that—guidance—and not a law. Consequently, some employees may legally challenge mandatory vaccination programs and there is no guarantee that a court will react favorably to a particular legal challenge. There are also important legal limitations with a mandatory program even under the EEOC’s guidance. Therefore, employers mandating the vaccine should be prepared for some resistance from employees, and many may opt to strongly encourage vaccination without requiring it. A recent survey found that while most employers have no plan to create a mandatory vaccination process, many do plan to encourage employees to get the vaccine. Nearly 90% said they would provide information to employees (e.g., how to get vaccinated, the benefits of doing so) and nearly 40% said they would offer vaccine administration at their facility to increase convenience – even though this may be easier said than done. A third said they would offer paid time off for employees to receive the vaccine and/or recover from any side effects.

We hope this summary provides some helpful information for your company to consider as you navigate this complex issue. Pursuing a mandatory vaccination program ultimately requires a company’s management, together with its legal and HR teams, to engage in significant planning and develop a program detailing how the process will work from beginning to end. If your manufacturing company would like to talk to our dedicated team, please contact us today. Additionally, if you have HR questions, please reach out to our wholly-owned subsidiary Visions HR, and connect with Janet Giannetta.

Sources: PBS, AARP, NY.Gov, SHRM

Should Your Company Make Vaccinations Mandatory

Have you considered making COVID-19 vaccinations mandatory? If so, you’re not alone. As the COVID-19 vaccine becomes more widely available, the scientific community did not foresee the next challenge being vaccine resistance, but it’s the reality that’s setting in across the country. Polling data continues to show that a significant percentage of Americans prefer not to receive the COVID-19 vaccine. Essential construction workers are less likely than the average U.S. employee to take the COVID-19 vaccine when it’s available to them. A series of surveys on employee acceptance of the vaccine found just 53% of workers in the construction industry said they would take the COVID-19 vaccine. There’s no doubt that publicizing team member vaccination is one effective way to assure customers of increased job site safety, and would mean less disruption on project completion time. So, how do construction industry leaders navigate this latest bump on the road to economic recovery? Read on for the latest guidance.

Can an employer make COVID-19 vaccinations mandatory for workers?

ANSWER: In December, the federal agency focused on workplace discrimination, the Equal Employment Opportunity Commission, said because the vaccination itself is not a medical examination, employers could make COVID-19 shots mandatory for their workers. Keep in mind that if employees have medical or religious reasons that prevent them from taking a coronavirus vaccine, employers could be legally required to give the workers some reasonable alternative to continue to work. Also, for employers with a unionized workforce, the employer must consider bargaining requirements before implementing a mandatory vaccine policy.

Can an employer ask an employee if he or she has already received the vaccine or require proof of vaccination?

ANSWER: Generally, yes. However, that inquiry can only be made, according to the EEOC, if the question is “job-related and consistent with business necessity” as provided under the ADA. To meet this job-relatedness standard, the employer will need to establish that the worker’s failure to be vaccinated would pose a “direct threat” to the well-being of that employee or others with whom the employee would have contact as part of his or her job duties.

Can an employer fire an employee who refuses to be vaccinated?

ANSWER: Possibly, in limited circumstances. The EEOC guidance reminds employers that it will need to make reasonable accommodations to employees seeking an exemption due to disability-related reasons or religious objections and will need to follow the established reasonable accommodation process under either the ADA or Title VII before taking any adverse employment actions. The EEOC cautions employers that if it can establish that an employee who is not vaccinated poses a direct threat (that cannot be accommodated without undue hardship), the employer can exclude the employee from the worksite, but the employer cannot terminate the employee without further consideration of the employee’s legal protections or other possible accommodation, including whether the employee can perform his or her job remotely.

President Biden recently moved up the timeline for vaccine allocation by ordering all states, tribes, and territories to make every U.S. adult eligible for the COVID-19 vaccines by May 1. According to New York State’s COVID-19 Vaccine Tracker, 13% of the population is currently completely vaccinated.

It is important to remember that the EEOC guidance is only that—guidance—and not a law. Consequently, some employees may legally challenge mandatory vaccination programs and there is no guarantee that a court will react favorably to a particular legal challenge. There are also important legal limitations with a mandatory program even under the EEOC’s guidance. Therefore, employers mandating the vaccine should be prepared for some resistance from employees, and many may opt to strongly encourage vaccination without requiring it. A recent survey found that while most employers have no plan to create a mandatory vaccination process, many do plan to encourage employees to get the vaccine. Nearly 90% said they would provide information to employees (e.g., how to get vaccinated, the benefits of doing so) and nearly 40% said they would offer vaccine administration at their facility to increase convenience – even though this may be easier said than done. A third said they would offer paid time off for employees to receive the vaccine and/or recover from any side effects.

We hope this summary provides some helpful information for your business to consider as you navigate this complex issue. Pursuing a mandatory vaccination program ultimately requires a company’s management, together with its legal and HR teams, to engage in significant planning and develop a program detailing how the process will work from beginning to end. If your construction company would like to talk to our dedicated team, please contact us today. Additionally, if you have HR questions, please reach out to our wholly-owned subsidiary Visions HR, and connect with Janet Giannetta.

Sources: ForConstructionPros, PBS, AARP, NY.Gov

Miscalculating KPIs is Costing You Money

Miscalculating KPIs is Costing You Money

In most cases, the two biggest expenses in your manufacturing business are labor and raw materials. In today’s business world, time is money and we understand the pandemic has created many unforeseen obstacles concerning product availability and dependable distribution. To stay competitive a company must define its mission, set attainable goals, and deliver a product that customers demand. If you’re not taking time to review key performance indicator (KPI) basics, you may be wasting valuable time, energy, and money. Reassessing your KPIs can improve workflow and fix the issues that are compromising the quality of your product, service, and reputation.

KPIs measure key company activities to ensure your team is operating efficiently.

While performance metrics also measure activity, don’t mistake these for KPIs. A performance metric can be used to measure a variety of activities ranging from the number of staff meetings employees attend to the amount of available product. Meanwhile, a KPI measures activities that are critical to the success or failure of your company. Measuring the number of staff meetings employees attend won’t make or break a company. But measuring the amount of product available for customers is a key indicator of your company’s ability to compete successfully.

One way to evaluate if a measurement is a key performance indicator or simply a performance metric is whether management will take action if the KPI is not met.

If management ignores the results of the KPI, it isn’t important enough to the success of your company, and it shouldn’t be considered a key performance indicator. If a KPI is put in place, management must have someone log and monitor activity. Management must also define a clear course of action to follow once the KPI results are known.

In addition to evaluating a critical activity, a KPI must be:

  • Realistic: Eliminating downtime isn’t a realistic KPI. An effective KPI would be “to reduce downtime by 5% through scheduled maintenance days.”
  • Specific: “Delivered on time” is not specific. A better KPI is “to complete delivery within three days of receiving the customer’s order.”
  • Measurable: The activity or performance must be quantifiable, such as tracking the rate of returned product.

 

Key performance indicators also:

  • Highlight areas where increased efficiency or a decrease in resources can be achieved.
  • Provide a progress illustration by presenting data in a chart or graphic.
  • Help identify seasonal trends.

 

Here is an example of a good manufacturing facility KPI:

Company goal: To provide superior customer service through quick delivery.

Key performance indicator: Lead time

Definition: Lead time is the length of time it takes from the beginning of the manufacturing process to the time the final product is delivered to the customer.

How it will be measured: Tracking the customer waiting time, which is the length of time between when a customer places an order and the customer receives the product.

Target: To reduce lead time by 2 percent.

Individual departments will have key performance indicators that further the company goal of providing superior service by reducing the lead time. A KPI for the manufacturing division might be to track the cycle time. The distribution division might track the finished goods inventory or the on-time and complete shipping rates. A KPI for the customer service department might be to track the rate of returned products. Implementing and tracking key performance indicators provides management with solid data to help make informed decisions. KPIs encourage a team effort toward achieving the company’s goals by promoting cooperation and clarity for workers. Taking simple, cohesive steps like these can reenergize your team and ensure all departments are synchronized in their daily, monthly, and quarterly objectives. For more ideas to help your business thrive in 2021, contact our Manufacturing Services Group today. We work with businesses in diverse industries including building materials, food processing, specialty sporting goods, commercial lighting, health, beauty, pharmaceuticals, and more. Whatever the size of your venture, we can help you meet your goals, now and for the future.

Tap into Millions with This Loan Program

Tap into Millions with This Loan Program

What is the 504 loan program?

Want access to millions of dollars to help your business overcome the challenges of the current health crisis? Look no further than the 504 loan program. It provides long-term, fixed-rate financing for major fixed assets that promote business growth and job creation. Generally, these loans max out at $5 million, but can go up to $5.5 million for “Small Manufacturers” and for certain energy projects. 504 loans are available through Certified Development Companies (CDCs), SBA’s community-based partners, and the loan is distributed among three parties. The business owner puts up a minimum of 10%, a conventional lender (typically a bank) puts up 50%, and a CDC puts up the remaining 40%. Most businesses find that when their 504 loan closes, the rate is highly competitive with other financing options, making this an accessible, cost-effective opportunity you may not have tapped into. Ultimately, it’s a chance for you to hold onto as much-coveted working capital as possible.

How could your construction company benefit?

SBA 504 loan money can be used to buy a building, finance ground-up construction or building improvements, or purchase heavy machinery and equipment. You can also use the loan for the improvement or modernization of land, streets, utilities, parking lots and landscaping, or existing facilities.

To be eligible, your business must:

  • Operate as a for-profit company
  • Have a tangible net worth of less than $15 million
  • Have an average net income of less than $5 million after federal income taxes for the two years preceding your application

Additionally, businesses must meet the SBA’s definition of a small business, which typically means fewer than 250 to 1,500 employees. One of the most notable borrower benefits? Because payments are consistent over the term of the loan, the long-term, fixed interest rates make it easier for your company to budget each month. Keep in mind that a 504 loan cannot be used for working capital or inventory, consolidating, repaying, or refinancing debt, or speculation or investment in rental real estate.

How do you apply?

The first step to apply is to contact your bank to learn more about the program, then prepare and assemble your 504 loan authorization package, using the SBA’s 504 Authorization File Library to identify the documentation you will need to apply for your 504 loan. This past fall, the SBA announced updated interest rates you can take advantage of to bounce back from COVID-19 financial disruptions. The program now allows for 10, 20, and 25-year interest rates as low as 2.2%. On average, the loans take around 30-45 days from application to funding. Approval time can, however, take anywhere from one to six months. Right now because of the Economic Aid Act, all borrower fees are waived through September 30, 2021, which means even more financial savings for your business. So, what are you waiting for? If you still have questions about how to get started, give our team a call today, we are happy to help out and can’t wait to get you access to the capital you need.