Since the start of COVID-19, the coatings industry and beyond has continued to develop and change. Most recently, one of the main questions has been, “What does a Biden administration hold for the coatings industry?” There are both good and bad possibilities.
Potential Positives and Issues
From a good perspective, the Biden administration has already signaled that it will be looking heavily into renewable and sustainable energy. Along those lines, you can expect that further stimulus money that is directed toward vertical infrastructure improvement will have a heavy leaning toward anything that involves renewable or sustainable energy. I think coatings are prime to capitalize on cool roof systems and other things of that nature that may assist in being able to take advantage of federal and state funding.
I also think that there’s going to be some favorable immigration policy for construction. One of the biggest threats to the coatings industry is the lack of skilled labor. It may be possible that we have the ability to create a legal way to obtain workforce outside of the United States in the event that demand continues to keep on pace with where it is right now.
As far as potential issues for the industry, one of the things that I’m always focused on is government regulation. Sometimes it’s a good thing, but sometimes it can be bad. One of the things we’re tracking right now is how the Biden administration will handle misclassification of employees. Oftentimes, coatings contractors will sub out a portion of their labor to perform jobs. The Biden administration has said that they’re going to take a close look at that relationship and see if they are truly independent contractors or if they are just your employees but you’re not calling them that. They’re going to see if you’re taking out payroll tax and doing the kind of things that you need to be doing. We need to make sure that we’re being proactive in getting as much information out there on how to beef up your subcontracts and how to make sure that you’ve got the right Standard Operating Procedures (SOPs) in place to do as much as you can to ensure that independent relationship.
Another topic we’re tracking is Occupational Safety Health and Administration (OSHA) rulemaking, investigations, and citations. I believe this year that we will see a couple of significant rulemaking efforts, one regarding COVID-19 and infectious diseases. Right now, there is not a specific standard based on this.
I also anticipate that there’s going be a more robust, revised heat illness and injury standard. Although it isn’t necessarily going to affect coatings contractors right now, it is going to affect them in the summer. Making sure that they stay abreast of what the latest changes are, implement proper training, and adjust their manuals is going to be critical moving into 2021.
Regardless of who is at the top, one of the things that remains consistent is that usually the rank and file is fairly consistent from administration to administration. What does change is how they operate and how they go about engaging in investigations, their initiatives, and the things that they’re focused on.
With the new Biden administration, I absolutely anticipate that there will be heightened regulation. There’s going to be more inspections and more enforcement. If you look back at the Obama administration, there was significant rulemaking. We had the silica standard, we had the beryllium standard for general industry, we had the inflation schedule, we had electronic recording, and a lot of other things that came out during that administration.
During the Trump administration, we saw very little. I think we’re going to return back to an Obama administration type of OSHA where it is heavily involved in rulemaking, inspections, and enforcement.
We have seen an uptick in COVID-19-related citations, especially in state plans in Oregon, Washington, and California, and similarly in Michigan and Virginia. The inspections that we’re seeing are failure to train and failure to comply. From an enforcement standpoint, this is an “easy kill” for an inspector. It’s easy for an OSHA inspector to spot if you don’t have a mask on or if you’re not socially distancing.
As far as COVID-19 enforcement from the client, there are really two situations that have traction. The first one is when you have an existing contract and, as part of that existing contract, the customer turns to you and says, “I don’t want anyone on my roof or anywhere in my building engaged in putting on any type of coating unless they can demonstrate that they have a vaccine.” The question is: can they do that? If it’s not required by the contract, and there is no federal, state, or local requirement that you be vaccinated, then the simple answer is no, they cannot require that. However, if you do decide to vaccinate your crew, you can obviously submit a change order or something seeking to recover the cost or additional downtime since some people who have had fevers or adverse reactions have needed to take some time off. You need to be compensated for that. But at the end of the day, contractually, your customer cannot necessarily enforce that.
That leads to the second situation: If you’re bidding a project now, can they say during the process of negotiating a contract, “We want your whole crew and anybody that comes on this jobsite to be vaccinated”? The answer is yes, they can absolutely require vaccinations.
If that is the case, you’ve got to have a sufficient amount of crew members to handle production. Let’s say you have a 10-man crew doing commercial coatings. If you have a couple people down, it’s not as easy to replace them unless you have others who are vaccinated that can join the crew. You need to factor potential production and workflow problems into your bid.
What becomes a lot trickier is trying to enforce your employees to get vaccinated. Mandating your employees to get vaccinated has a lot of legal issues. We recommend that you move to a voluntary program rather than a mandatory program because you might potentially run into either discrimination or disability type issues related to religion or things of that nature. Also, it could be a concern from an employee morale standpoint.
There is opportunity out there — significant opportunity. What the Biden administration has signaled is a marked change from the fossil fuel, oil, and gas type economy to the renewable energy-based, carbon capture, solar, wind, hydro collection type mentality. Along those lines, I think this is an opportunity for any coatings contractor to diversify its lineup and to make sure that it’s capitalizing on these potential new initiatives.
Green sells. That’s the bottom line. Regardless of what you think about it, at the end of the day, if you’re concerned about revenues, then there’s not only going to be the potential for federal tax credits and other incentives that you can pitch to your owners, but it also gives you an opportunity to differentiate yourself from your competition.
I’m excited for 2021. I know it’s kind of easy to get down about pandemics, riots, etc., but, at the end of the day, I always feel a setback is a setup for a greater comeback, and I think this is a great example of that. There is opportunity out there, especially for the coatings industry. Take advantage of it.
About the Author:
Trent Cotney is CEO of Cotney Attorneys and Consultants, a practice that focuses on all aspects of construction litigation and arbitration, including OSHA defense, lien law, bond law, and bid protests, as well as construction document review and drafting. For more information, contact: Cotney at (866) 303-5868 or visit www.cotneycl.com.
Editor’s note: This article is based on a CoatingsPro Interview Series podcast episode that originally aired in February 2021.