Agreed, all the pavement out there is not going to sweep itself if you become too distracted from your mission by obscure and tedious busywork trying to stay ahead of legal risks. At least, that sounds reasonable. But, unfortunately, it’s an oversimplification of the very extensive range of serious business legal responsibilities for pavement sweeping company owners.
Those can include, for example, safety compliance, environmental, employee, and consumer protections, and cybersecurity, among others. Below is a list of some laws that govern the activities of commercial sweeping contractors:
How to Protect Your Business and Yourself Legally
There’s a rather shocking range of legal concerns affecting the rights and standing of business owners in the US. Consider these legal circumstances of high consequence for all pavement sweeping contractors and general contractors with sweeping services working as subcontractors.
OSHA Law
The US federal Occupational Safety and Health Administration code is to protect workers’ health and safety on the job. Penalties for a failure to comply with one of the laws can result in a fine of over $16k, unless it is a willful violation which can lead to a fine of $161k, up to 6 months in prison for the employer, and additional fines of double the gross gain or loss due to the violation.
EPA Law
The Environmental Protection Agency For sweeping businesses, State emissions laws are likely to be a significant cost factor, and noncompliance can be costly, depending on your state, the number and kinds of sweeper trucks and other fleet vehicles you operate, truck ages, maintenance habits, and driving behaviors of the team. Waste disposal laws applicable to dumping hoppers on commercial sweeper trucks can cost operators significant amounts of time, inconvenience, and fees to maintain compliance.
Driver License Law
Depending on the size, type, and functionality of your sweeper truck(s) and the state and county you operate in, your driver(s) may be required to obtain a CDL license, vs. a regular driver’s license before operating your trucks. Depending on the state, penalties for driving without a required CDL license is a Class A Misdemeanor and may range up or downward from a $1000 fine, 6 months in jail, and 3 months of ineligibility from applying for a CDL license. If an accident results, the crime status is higher and the penalties can become extreme.
Workers’ Comp Law
Workers’ compensation is a state-required or voluntary workplace injury insurance system to protect employees from medical costs and loss of income in cases of work-related illnesses, disease, or injury. Workers’ Comp can cover medical expenses, a portion of the impacted worker’s lost wages, and even permanent disability benefits. Employers who carry Workers’ Comp insurance are protected against civil lawsuits that might otherwise arise from work-related impacts to employees’ health and/or safety.
Tax Law
The full array of tax laws that may apply to your business and your personal finances can include federal, state, and city income tax, as well as the employer portion of each worker’s income tax. Tax laws may or may not include personal property tax in your area or personal state income tax on your own income from your business. State and/or local sales tax may apply to goods you purchase that will be resold as part of a finished product or service and/or that will be consumed directly by your business’s owner(s) and/or workers.
FICA Law
The Federal Insurance Contributions Act requires employers to deduct their own and their employees’ portions of the required FICA premiums from every paycheck. Those payments are recorded in the Social Security system. Noncompliance with this federal requirement can bring some of the most severe penalties of any to which an employer may be subjected in cases of failure to meet federal withholding obligations. An employer found guilty can receive both civil and criminal penalties, with the latter even including up to 5 years in prison.
HIPAA Law
The Health Insurance Portability and Accountability Act protects people whose health and medical information and associated details are maintained by another party. A deliberate violation of HIPAA law can result in staggering penalties, including up to a $50k fine and one year in prison.
Fraud Prevention and Privacy Law
Federal law protects consumers’ right to privacy and protection from theft and misuse of their financial information. Financial details stored in your online payment system must be protected from undue exposure to hacking, theft, and sale or fraudulent use of such information. Failure to maintain adequate security of customers’ financial information in your network system can lead to civil court judgments and extreme brand damage that can threaten your business.
Contract Law
Small sweeping contractors should be especially interested in efficient ways of collecting overdue balances, since there is often not enough money at stake in a delinquent account to file a lawsuit to collect it. As a contractor doing a job for a commercial property owner, a small developer, etc., you are often in a position to actually prepare the contract. There are advantages to writing the contract provisions with your own lawyer, such as a clause for attorney’s fees if you have to pursue collections through a court and win the case. Generally speaking, as a sweeping contractor, when you write a contract, you should avoid any risks that you’re able to defer to the property owner or a subcontractor you may have working through you on the job.
Debt Collections Law
You can improve your success rate at collecting money from slow-paying customers by, first, knowing who you’re dealing with in each prospective customer. Before signing a contract to provide your sweeping services, consider whether the hiring party has the necessary resources to pay you on time. If that is uncertain, then think about what remedies you have at your disposal and how effective they are really likely to be. Do your due diligence, and make your business decision about whether entering the contract makes sense for you. Signing a service contract is essentially a decision to grant credit, i.e., the same thing a bank does when providing a loan.
Lien Law
For small sweeping contractors doing work for private entities, the best recourse in cases of nonpayment is the ‘mechanic’s lien” against the customer’s business, property, final estate, or whatever is subject to such a lien. Another way to help a subcontractor ensure eventual payment of overdue amounts is obtaining a payment bond from the customer before the work begins. Another is to have the customer put the funds to be paid in an escrow account. Yet another method is to have your customer write a joint check. You need to determine upfront whether you will need to use one of these methods of ensuring proper payment. After you’ve legally agreed in the contract to do the work, the window has closed on these options.
Credit Law
To help confirm the creditworthiness of prospective customers, listen to word-of-mouth. Ask other contractors, and/or materials suppliers, and others, about their experience in being paid by the party. If the job is large and depends on borrowed funds, examine a commitment letter from the customer’s lender. If you’re a sub on a large/long contract, ask if the project owner has obtained a payment bond for it. Avoid letting any customer build up a high account balance before you pursue your collection rights under your contract. Modify your contract before signing, as needed, to remove a requirement for you to keep working for 30 or 60 days longer after the account goes 30 days, before you can actively pursue collections. When you sign the partial waiver each month during a long contract, be sure you’re not waiving your lien rights. Track your receivables to ensure that you discover a collections problem asap.
Insurance Law
Damage Liability Insurance is an essential for working as a contractor for most construction project owners, property managers, and others. The amount of liability coverage you are required to have can vary between routine sweeping customers, construction project sizes, etc. In any case, you pay your premiums to shift the risk to your insurance carrier. General contractors often try to transfer as much of their liability risk as possible to subcontractors. When providing service as a sub, it is recommended that you try to minimize the amount of liability transferred to your business.
Indemnification Law
Indemnity is an issue on all construction projects. The project owner wants protection if an injury or death occurs in the course of the project. So, the owner seeks to obtain formal indemnification from contractors on the job. It is naturally in a contractor’s interest to limit the extent of the indemnity as much as possible to minimize his own risk. It is recommended that you consult with your attorney if you are concerned about the scope of indemnity proposed. Generally, you may opt to accept the standard indemnity clause with additional words of your own, or some tweaks to reduce the level of risk to you that the clause represents.
Resolving Business Legal Disputes
Legal remedies for or against sweeping contractors in civil disputes may allow or require cases to be resolved in arbitration. That’s usually a faster and less expensive approach to dispute resolution. You may be permitted to collect or be forced to pay interest on disputed amounts, depending on the outcome of the case, of course. You may be allowed to recover or forced to pay damages, depending on whether you or the other party are found at fault for a delay or other issue.
For example, if a construction site sweeping or a milling cleanup contract becomes delayed for months, the sweeping contractor may want to recover overhead, etc. The sweeping contractor may want to dissolve the contract by negotiation, or take advantage of a recognized legally allowable exception to one or more terms of the contract. It’s important to understand, going in, what those are.
Common Serious Legal Issues for Sweeping Businesses
Undoubtedly, you’ve already sought and acted on good upfront legal advice for structuring your business as an LLC, or other taxable entity that provides you with strong personal asset protection. The legal encumbrances discussed above are everyday concerns for sweeping contractors. There are many more. Whatever their individual nature, they all fall under one of the two legal categories — civil law or criminal law. Some cross both.
Civil law governing contract performance covers a vast range of particulars that we can’t cover here, for example, procurement problems, bid protests, performance issues, change orders, contract job delays, work suspensions, extras, productivity loss claims, no damages for delay clauses, and so many other types of contract law matters. The overall message on such civil law questions is that you can much better protect yourself by carefully examining or writing the terms of the service contract yourself.
Criminal law noncompliance typically has associated civil suit implications following prosecution. So, all sweeping contractors should take all applicable laws very seriously to avoid the risk of negligence, perceived wilful noncompliance (OSHA, etc.), or other escalated charges stemming from lesser offenses.
A good rule of thumb for business managers in any service work environment is — in everything you do and have your employees engaged in, consider the flipside of your own interest. Think about the perspective of and costs to the other participants in the job. Those are your workers, your customer, and the general contractor, if you’re a sub. Consider all the potential issues that can arise for them.
That won’t eliminate all your legal risks, of course, but it can help you build goodwill, significantly improve working relationships, and build your B2B brand and employer brand. All those can be major benefits in mitigating legal issues and reaching solutions outside court.