Maintaining Compliance: Key Labor Laws for Construction HR Managers

This blog discusses sexual harassment and discrimination in the workplace. Reader discretion is advised.

For human resources managers on construction sites, staying compliant with labor laws can be a challenge.

Commercial construction is subject to a complex web of federal, state, and local regulations with diverse projects and varying labor classifications, wages, and safety standards that make compliance particularly challenging.

According to a report by the Bureau of Labor Statistics, the construction industry had a turnover rate of 5.2% in 2024, higher than the national average of 3.7%.

This high turnover rate can make it difficult for HR personnel to ensure compliance across the organization as well.

To avoid costly legal penalties as construction companies bring on more new workers, human resources managers must stay informed about ever-changing labor laws and develop policies that align with labor regulations. Business owners must understand these legal requirements to avoid costly penalties.

Maintaining compliance requires a deep understanding of regulatory changes to ensure company policies remain current. This is why we created this comprehensive breakdown of the various labor laws that HR managers for construction companies need to understand to maintain compliance.

Key Takeaways for Construction Human Resources Managers:

• Construction labor laws regulate various aspects of employment, including wages, hours, safety, health, and union relations. HR teams must thoroughly understand and interpret these laws to ensure their organization is in full compliance and create a positive work environment.
• Accurate timekeeping and wage statements are essential for ensuring compliance with labor laws. Misclassifying employees as independent contractors can result in significant legal and financial penalties.
• Human resource teams must address various compliance issues and meet compliance obligations to ensure organizational adherence to labor laws. Human resources management plays a pivotal role in ensuring compliance across all aspects of construction operations.
• Collective bargaining agreements and labor disputes are frequent occurrences in the construction industry. Human resources plays a critical role in effectively managing relationships with unions and resolving conflicts.
• Equal Employment Opportunity (EEO) is crucial in the construction industry because of its diverse workforce. HR must prioritize anti-discrimination policies and harassment prevention.
• Construction companies must prioritize I-9 verification, visa sponsorship, and compliance with the Immigration Reform and Control Act (IRCA). HR professionals must thoroughly understand and adhere to federal immigration laws.
• An HR management solution can simplify compliance efforts. Key features include centralized recordkeeping, employee training management, and efficient document management. Compliance reporting and effective employee communication can enhance overall compliance efforts.

How is HR Impacted by Construction Labor Laws?

Construction labor laws are a set of regulations that govern the employment of workers in the construction industry.

These laws cover various aspects of employment, including wages, hours, safety, health, and union relations.

They’re designed to protect the rights of construction workers and ensure fair labor practices within the industry. They regulate various aspects of employment, including wages, hours, safety, health, and union relations.

Human resources teams must understand and interpret these laws to develop proper policies and procedures that comply with government regulations.

Non-compliance with construction labor laws can result in fines, penalties, and negative impacts on the company’s reputation.

Common labor law mistakes include misclassifying employees, paying incorrect overtime, and violating minimum wage laws.

By understanding and complying with construction labor laws, HR can help mitigate legal risks, maintain a positive workplace culture, and protect the interests of both the company and its employees.

How Do HR Managers Help Maintain Construction Wage and Hour Compliance?

Wage and hour compliance in the construction industry is a critical aspect of HR due to the unique nature of the work and the potential for noncompliance.

Every construction business must implement robust policies to ensure wage and hour compliance.

To ensure compliance with wage and hour laws, construction companies should implement robust policies and procedures, provide training to managers and employees, and conduct regular audits of payroll practices.

Human resources departments must monitor and enforce wage and hour regulations.

Having a detailed understanding of the laws that affect wage and hour compliance is essential for workplace compliance.

Minimum Wage

Construction workers are entitled to be paid at least the federal minimum wage. However, many states and municipalities have implemented higher minimum wages, which take precedence over the federal minimum.

HR managers in the construction industry must ensure that all employees are paid at least the applicable minimum wage.

Failure to comply with minimum wage laws can result in significant legal penalties, including back pay, fines, and even criminal charges.

Overtime Compliance

Construction workers earn overtime pay typically at a rate of time-and-a-half for hours worked beyond the standard workweek.

However, there are exceptions, such as for certain executive, administrative, and professional employees.

HR must apply the primary duties test to determine whether an employee is exempt. This test requires the employer to evaluate the nature of the employee’s primary duties and determine whether they meet the criteria for an exempt position.

In addition to the primary duties test, exempt employees must meet a minimum salary requirement. The Department of Labor publishes the minimum salary level for exempt employees, which is periodically updated.

HR is responsible for accurately classifying employees as exempt or non-exempt. Misclassifying employees as exempt can lead to significant legal and financial consequences.

Prevailing Wage

Prevailing wage refers to the minimum hourly wage that must be paid to workers on certain public construction projects, and it is determined by a survey of wages paid to similar workers in the local area.

The Davis-Bacon Act is a federal law that requires contractors and subcontractors working on federally funded construction projects to pay the prevailing wage for that area and fringe benefits to workers.

Many states and localities have similar prevailing wage laws, which may apply to both public and private construction projects.

Any construction employee working in multiple states is entitled to be paid the prevailing wage rate for the area they are working in.

Penalties for Construction Wage and Hour Noncompliance

Construction companies must maintain accurate time records for all employees, including hours worked, overtime hours, and wages paid.

Employees will receive these regular wage statements that show their gross earnings, deductions, and net pay as proof of payment.

Failure to pay employees the minimum wage or overtime can lead to wage theft charges, which can result in significant fines and penalties.

For example, employers who violate wage and hour laws may be required to pay back wages to affected employees, or employees who believe they have been denied their rightful wages may file lawsuits against their employers for a violation of their employee rights or unfair labor practices.

What is HR’s Role in Construction Health and Safety Management?

Understanding HR’s role in prioritizing safety and health allows construction companies to reduce accidents, improve employee morale, and enhance their overall performance.

Safety Programs

Construction companies must identify and assess potential hazards on the jobsite. Construction safety programs require continuous updates to address evolving risks on job sites. Once hazards are identified, employers must evaluate the risks associated with each hazard and determine appropriate control measures.

Human resources ensure that safety regulations are followed and best safety practices are implemented across all construction sites.

HR works with the health and safety managers on construction sites to ensure that all eligible employees receive adequate safety training and that jobsites are in compliance with Occupational Safety and Health Administration (OSHA) standards. Some of the safety training employees receive are:

• General safety awareness
• Specific training on job-related hazards
• Emergency procedures

When accidents occur, HR should conduct thorough investigations to identify the root causes and implement corrective measures to prevent similar incidents in the future.

Workers’ Compensation

Construction companies are required to carry workers’ compensation insurance to cover the medical expenses and lost wages of employees who are injured on the job.

HR is often involved in the workers’ compensation claims process, including:

• Reporting accidents
• Assisting injured employees with filing claims
• Coordinating medical care
• Managing return-to-work programs

How Can HR Navigate Employee Classification Laws?

Appropriate employee classification in the construction industry is a critical issue, as misclassification can have significant legal and financial consequences.

Understanding the criteria for determining employee status and taking steps to classify workers correctly can greatly assist construction companies in avoiding legal and financial risks and ensuring that their employees are treated fairly. Construction managers must work closely with HR to ensure proper classification of workers.

These are the primary employee classification laws for the construction industry.

Independent Contractors vs. Employees

The primary distinction between independent contractors and employees is the degree of control the employer exercises over the worker. Factors considered in determining classification include:

• Control Over Work: Does the employer control how the work is performed, or does the worker have significant autonomy?
• Control Over Hours: Does the employer set the worker’s hours, or can the worker set their schedule?
• Control Over Equipment: Does the employer provide the tools and equipment needed for the work, or does the worker provide their own?
• Payment Structure: Are workers paid a salary or hourly wage, or are they paid a flat fee for completing a project?
• Benefits: Does the employer provide benefits to the worker, such as health insurance or retirement plans?

What is HR’s Role in Employee Classification?

Human resources plays a critical role in ensuring that employees are correctly classified. This involves:

• Conducting a Thorough Review: Before hiring a worker, HR should carefully evaluate the factors that indicate whether the worker is an employee or an independent contractor.
• Developing Written Agreements: Clear written agreements should be in place to outline the relationship between the employer and the worker.
• Staying Informed of Legal Changes: HR should stay updated on changes in labor laws and regulations that may affect employee classification.

Consequences of Misclassification

Misclassifying employees as independent contractors can lead to violations of wage and hour laws, such as failure to pay overtime or minimum wage.

Employers may also face tax penalties for misclassifying employees as independent contractors, and misclassified employees may be denied access to employee benefits, such as health insurance and retirement plans for construction workers.

Misclassified employees may not be eligible for protections under labor laws, such as the right to unionize or file for unemployment benefits.

Misclassification can also lead to employment lawsuits, resulting in significant legal and financial repercussions.

Why is Employee Classification Important?

Correctly classifying employees as either independent contractors or employees is crucial for several reasons:

• Legal Compliance: Misclassification can lead to significant legal and financial penalties, including back pay, fines, and interest.
• Tax Implications: The IRS closely scrutinizes the classification of workers. Incorrect classification can result in tax penalties for both the employer and the worker.
• Labor Law Protections: Employees are entitled to various labor law protections, such as minimum wage, overtime, and workers’ compensation, as listed above. Independent contractors may not be eligible for these benefits.
• Workplace Safety: Employers have a duty to provide a safe workplace for their employees. Misclassifying employees as independent contractors can limit the employer’s liability for workplace injuries.

Best Practices for Managing Employee Classification in Construction

Before hiring a worker, conduct a thorough review to determine whether the worker should be classified as an employee or an independent contractor.

Have written agreements in place that clearly outline the relationship between the employer and the worker.

If you are unsure about how to classify a worker, consult with an attorney who specializes in employment law.

How Can HR Managers Ensure Compliance with Union Relations?

Union relations play a significant role in the construction industry, especially in areas with strong union presence. Human resources managers face unique compliance challenges when dealing with unionized workforces. HR professionals must understand the nuances of union contracts and labor negotiations to effectively manage their workforce.

By understanding the complexities of union relations, human resources professionals can minimize labor disputes.

Labor Negotiations

Collective Bargaining Agreements (CBAs) are legally binding agreements that outline the terms and conditions of employment for unionized workers.

They typically cover issues such as wages, hours, benefits, seniority, and grievance procedures.

Many CBAs contain union security clauses, such as union shop or agency shop provisions, which require employees to pay union dues or fees as a condition of employment.

Unionized construction workers are typically represented by bargaining units, which negotiate with employers on behalf of their members.

The process of negotiating CBAs involves representatives from both the employer and the union bargaining unit.

If negotiations fail to reach an agreement, the parties may resort to mediation or arbitration to resolve their differences.

Labor Disputes

In the event of a labor dispute, unions may resort to strikes, while employers may implement lockouts.

Unions may engage in picketing to exert pressure on employers and their customers. During this time, HR personnel may hire replacement workers to continue operations during a strike.

HR’s Role

HR must maintain positive relationships with both unionized and non-unionized employees as they are responsible for ensuring compliance with the terms of CBAs and addressing any grievances or disputes.

To do so, human resources must develop and implement a labor relations strategy that aligns with the company’s overall business objectives.

What are the Unique Challenges of Equal Employment Opportunity in Construction?

Equal Employment Opportunity (EEO) is a fundamental principle that requires employers to treat all employees fairly and without discrimination.

In the construction industry, EEO is particularly important due to the diverse nature of the workforce and the potential for discrimination based on various protected characteristics. Human resources must stay updated on evolving compliance laws to maintain a diverse and inclusive workplace.

Prioritizing compliance with the Equal Employment Opportunity Commission (EEOC) allows construction companies to create a more inclusive and equitable workplace, which can lead to improved employee morale, productivity, and overall business success.

Anti-Discrimination Laws

The Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Genetic Information Nondiscrimination Act prohibit discrimination based on protected characteristics such as race, color, religion, sex, national origin, age, disability, and genetic information.

Many states and localities have their own anti-discrimination laws, which may provide additional protections to employees.

To prevent workplace discrimination in the construction industry, human resources personnel must stay up to date with these regulations.

Harassment

Harassment is strictly prohibited in the workplace, including construction jobsites, and can take many forms, including verbal, physical, or visual conduct.

It can occur between employees, supervisors, or customers, but all will require action from HR personnel.

Sexual harassment is a form of harassment that includes any unwelcome sexual advances, requests for sexual favors, or other verbal, physical, or visual conduct of a sexual nature.

Harassment based on protected characteristics refers to any unwelcome behavior that creates a hostile work environment for an employee because of their membership in a protected class.

Affirmative Action

Many companies voluntarily implement affirmative action programs to increase the representation of underrepresented groups in the construction workforce.

Companies that receive government contracts may be required to implement affirmative action plans to meet certain goals for hiring and promoting minority and female employees.

HR’s Role

Developing and implementing EEO policies and procedures that comply with applicable laws is a huge responsibility for HR.

Providing detailed training to all employees on EEO laws, harassment prevention, and workplace diversity can help avoid workplace harassment and discrimination.

If there are any complaints of discrimination or harassment, HR must investigate and take appropriate disciplinary action if necessary.

Human resources personnel will upload any appropriate punishments for workers who do not adhere to discrimination policies, including the hiring of new employees or firing of any offending employees.

Continuously monitoring the company’s workforce to ensure that it is diverse and free from discrimination is a crucial HR responsibility.

Why is Managing Immigration Compliance an HR Priority?

Immigration compliance is a critical area, especially for construction companies that employ foreign workers.

HR professionals must understand and comply with federal immigration laws to avoid legal penalties and maintain a compliant workforce.

Understanding and complying with immigration laws allows construction companies to avoid legal penalties, maintain a compliant workforce, and attract and retain talented employees from around the world.

I-9 Verification

All employers in the United States are required to verify the identity and eligibility for employment of all new hires using Form I-9.

Completed I-9 forms must be retained for at least three years or one year after the employee’s termination, whichever is later.

Visa Sponsorship

For foreign workers seeking employment in the United States, there are several employment-based visa categories, including H-1B (specialty occupation), H-2B (temporary non-agricultural worker), and L-1 (intracompany transfer).

In many cases, employers must obtain a labor certification from the U.S. Department of Labor, which certifies that there are no qualified U.S. workers available for the position.

Human resources managers should consult with an immigration attorney to understand the specific visa requirements for foreign construction workers and to navigate the complex immigration process.

Immigration Reform and Control Act (IRCA)

IRCA prohibits employers from hiring or continuing to employ unauthorized immigrants, and employers who knowingly hire unauthorized immigrants may face civil and criminal penalties.

Employers may use electronic verification systems, such as E-Verify, to confirm the employment eligibility of new hires.

The U.S. Immigration and Customs Enforcement (ICE) may conduct audits of employers to ensure compliance with immigration laws.

How Can an HR Management Solution Keep Construction Companies Compliant?

With all the various labor laws to monitor, it can be difficult for HR personnel to maintain compliance with labor laws.

However, the labor law compliance process is simplified by leveraging a human resources management solution with an employee self-service portal.

These solutions allow construction companies to streamline compliance efforts, reduce the risk of violations, and ensure a more efficient and compliant workplace. Implementing compliance software can streamline regulatory adherence and reporting.

A comprehensive human resources management solution solution equipped with an employee self-service portal can significantly enhance construction companies’ compliance efforts.

Centralized Recordkeeping

A human resources employee self-service portal can securely store, manage, and track I-9 forms, Veteran Status, EEO, W-4s, and more to ensure compliance with immigration laws and facilitate easy access for audits.

Centralized storage of employee information helps maintain accurate records and simplifies compliance with various labor laws, including:

• Contact details
• Emergency contacts
• Employment history

Automated Time and Attendance

To help facilitate time and attendance management, the cloud-based human resources management software can allow employees to request time off with ease, reducing the risk of wage and hour violations for construction workers.

Employees are also able to submit and track vacation, sick days, or other leave requests directly through the portal and check detailed attendance logs to stay informed about accrued PTO and overtime hours worked.

Employee Training and Certifications

Simplify the tracking of employee training and certifications with the portal to ensure that workers are qualified to perform their jobs and meet industry standards.

By managing training records, the portal helps construction companies comply with OSHA regulations and other safety standards, as well as professional development.

Document Management

An HR management solution can store important documents, such as safety manuals, policies and procedures, and employee handbooks, ensuring easy access and compliance with various regulations.

This makes it easy to track changes to documents, ensuring that employees are always working with the most up-to-date versions.

Employee Communication and Notifications

Send real-time notifications to employees about important updates, such as changes to company policies, safety procedures, or compliance requirements, through the portal.

Effective communication can help prevent misunderstandings and ensure that employees are aware of their obligations and responsibilities.

Compliance Reporting

Utilize the software to generate automated reports for proper compliance metrics, such as I-9 compliance, safety training completion rates, and time and attendance records.

An HR management software streamlines the process of creating and managing an audit trail. It centralizes document storage, automates signature collection, and tracks document access and changes.

This can help safeguard all required documentation, ensuring it is signed, stored securely, and easily accessible for audits or legal purposes.

By providing insights into compliance data, the portal can help construction companies identify areas for improvement and take proactive measures to prevent violations.

See How hrHQ Can Help Your Construction Company Stay Compliant

HR managers in construction play a crucial role in ensuring compliance with labor laws. From wages and hours to safety and employee classification, the responsibilities are broad and demanding.

By leveraging advanced human resources tools and strategies, construction companies can mitigate legal risks while improving employee morale and productivity, which contributes to overall success. By prioritizing labor law compliance, a construction company can build a foundation for long-term success.

To help streamline compliance efforts, consider using a construction human resources management software like hrHQ.

With features like centralized records, automated time tracking, and training management can help HR professionals stay organized and ensure compliance.

Our system acts as a dashboard for HR specialists to manage all employee data, streamline new hire onboarding, and increase self-service opportunities for staff.

hrHQ makes it easy for HR managers to track all new employee document requirements and generate free HR reports to ensure regulatory compliance with labor laws.

Chat with a specialist today to learn more!