Utility and Transportation Contractor April 2015

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Utility and Transportation Contractor, APRIL 2015 1

2 Utility and Transportation Contractor, APRIL 2015

President’s Message

Best regards,

Scott Lattimer

As we try to remain positive these are the days when it

becomes very difficult. It seems all too often, just as soon as

we think we have something good going, Lucy pulls the football

away and we end up flat on our back. In our case, instead of

a football it is the renewal of the Transportation Trust Fund

(TTF) and Lucy’s part is played by our Governor. Other than

one fringe group there has been no opposition to renewing the

soon to be insolvent Trust Fund. Everyone from the business

community, the media, our industry and our partners in the

building trades all recognized the need

for a long term and sustainable funding

source for the TTF. This concept has

support from the Senate President and

Speaker of the Assembly in addition to

rank and file members of both houses

and both parties. It seemed we had finally

reached the goal line and New Jersey

would have the first real commitment to

infrastructure since the Kean

administration, and then it became

apparent that the Governor had backed

away from the negotiations. Without the

Governor’s support, promoting

whatever plan the Legislature and

advocates support would be an exercise

in futility. Time will only tell what the

Governor’s solution will be. While the

Governor has shown leadership on many

other issues we need him to be the leader

he promised New Jersey when it comes

to the TTF. Without a reliable and first

class infrastructure network, our State

will fall further behind in economic

activity than it already has and there is no way to tell if we will

be able to recover. The ball is in the Governor’s court.

UTCA staff and committee members have held numerous

meetings to revise specifications for the betterment of the

industry. The labor committee is negotiating terms for a more

successful and fairer approach to pension reform in order to

reduce or eliminate the financial responsibility of contractors

for failed pension systems. It is neither fair nor reasonable

that contractors should have to pay into the pension system for

a second time when they held up their end of the bargain the

first go around. The burden should be left with the people

responsible for the pensions to make sure that they are funded

and distributed properly.

On a lighter and more optimistic note, the New Jersey

Environmental Infrastructure Trust Fund reported at our most

recent South Jersey Membership Meeting, that it has close to a

billion dollars in projects either on the street or soon to be let.

That is good news for our industry, as it is represents a

significant increase over what we have seen in the past and the

future looks bright.

Continuing on with the good news, many UTCA members

just returned from our Executive Seminar in Sonoma and San

Francisco, California. This seminar

proved to be very educational with some

great presentations, which you will hear

about from Dennis Hart inside this

edition. It was great to see some new

faces on the trip and we hope that it was

a beneficial experience to all those that

attended. The weather and tours were

absolutely amazing.

Keeping with good news we are very

happy to acknowledge the two

milestones that Sanitary Construction

and DW Smith Associates are

celebrating. Sanitary Construction is 100

years old and DW Smith Associates has

reached 50 years in business.

Congratulations to both companies! Keep

up the great work.

In closing, I ask for your help with

our Constructors for Good Government

PAC program. Whether your firm is large

or small, UTCA’s PAC Clubs have a

membership level designed to fit your

financial capabilities. Every little bit helps

our mutual cause. The UTCA staff have been working tirelessly

to have laws passed that benefit the industry and to stop others

that would harm our businesses. In government and politics,

political contributions are simply part of the business and we

need to make sure our industry’s collective voice is heard in

Trenton. Please contribute what you can and thank you to those

that have already supported the UTCA PAC.

Features 4 Sanitary Construction Completes

100 Years In Construction

15 A Message From

U.S. Senator Cory Booker

28 Sonoma/San Francisco

Executive Seminar

45 Highway Trust Fund:

Groundhog Day Or Not?

48 DW Smith Associates Celebrates

50 Years In Business

55 Affordable Care Act:

Understanding The Employer

Reporting Requirements

APRIL 2015

Volume XL, Number 2

Departments 2 President’s Message

21 Financial Overview

24 Legislative News

40 Safety Perspective

53 Legal Dig

63 Labor Relations

66 Accounting Corner

Contents

Published Bimonthly

During 2015

Office Address:

1670 Route 34 North

Farmingdale, NJ 07727

Mailing Address:

PO Box 728

Allenwood, NJ 08720

(732) 292-4300

FAX: (732) 292-4310

www.utcanj.org

Publisher:

Robert A. Briant, Jr.

Editor:

Michael DeVito

Editorial Contributors:

Anthony Attanasio

Mike DeVito

Dennis Hart

Dan Neville

Advertising Manager:

Helene Nasdeo

Photographer:

Michael DeVito

Cover Photo:

Image Up

Production/Graphics:

Lauren Hagan

Helene Nasdeo

Circulation:

Helene Nasdeo

Printed By:

American Plus Printers

Affiliations:

ARTBA

Clean Water Construction Coalition

Water Infrastructure Network

UTILITY AND TRANSPORTATION CONTRACTOR

(ISSN 0192-4843) is published six times a year by

the Utility and Transportation Contractors Associa-

tion of New Jersey, 1670 Highway 34 North,

Farmingdale, NJ 07727. Periodical postage paid at

Farmingdale, NJ and additional mailing offices.

POSTMASTER: Send address changes to UTILITY

AND TRANSPORTATION CONTRACTOR, PO Box

728, Allenwood, NJ 08720.


CoverPictured on the cover from left to right are

William Cervino, Michael Cervino Sr.,

Anthony Cervino, Michael Cervino Jr., Todd

Cortese.

4

28

48


Sanitary Construction Completes100 Years In Construction

Fourth Generation Family Members Now Involved

Cover Story

When any business is able to reach the century mark as an

entity, that firm most certainly should be lauded, especially when

that firm has been able to weather the many ups and downs the

construction industry has seen during that time period. Sanitary

Construction was incorporated in 1915 by brothers William Cervino,

Michael Cervino, Jr. and Anthony Cervino. In the 100 years since

incorporation, Sanitary Construction has survived the 1929 market

crash, the Great Depression of the 1930’s, World War I, World War

II, the Korean & Vietnam Wars and numerous recessions. Today

the firm continues to thrive and grow.

The idea of a family-owned construction firm actually dated back

30 years prior to its incorporation in 1915. Family patriarch Michael

Cervino, Sr. had completed work in 1885 for the Erie Railroad which

spring-boarded his foray into the construction industry. His

aforementioned three sons would later utilize their father’s

experience to

establish Sanitary

C o n s t r u c t i o n .

Early work for the

new firm included

water, drainage,

sewer and road

c o n s t r u c t i o n

projects in North-

ern New Jersey.

An early project

for Sanitary which

was completed in

the 1920’s was for

the installation of

a sanitary sewer

system on Union Avenue in Paterson. This $380,000 project was

completed with a steam generated trenching machine. The firm

successfully completed many more projects throughout the 1920’s.

Pictured are Sanitary forces on a project from

the 1930’s.

By 1948, one of the three brothers, Anthony Cervino, took over

the family business along with his wife Margaret Palladino Cervino.

Construction projects were completed in Bergen and Passaic

counties during that time. Margaret Cervino was involved with

numerous aspects of the business including estimating, payroll

and accounts payable/receivable, and at the same time was busy

raising her four sons who would form the next generation of the

firm. Ironically, Margaret Cervino was also born in 1915 – the same

year that the firm was incorporated.

For the next two decades, Sanitary Construction completed

numerous projects in both the public and private sectors of

construction. The firm had gained a reputation as a top-notch

utility contractor that could complete difficult work on time and

within budget.

Pictured is an aerial view of a project in Morristown.


However, in 1969 a major event rocked the Cervino family when

Anthony Cervino passed away. The newly-widowed Margaret

Cervino, with four sons under the age of 18, took the reins of the

company and opened many eyes with her successful operation of

the firm. After she was able to convince Sanitary’s bonding

company and bank that she could handle the challenge of the

business, Margaret Cervino competitively bid jobs and supervised

quality work, all while raising four sons.

By the 1980’s Sanitary Construction completed major sewer

projects in Wyckoff and Mt. Olive, as well as pump stations at

Picatinny Arsenal and various bridge rehabilitation projects. The

work at Picatinny included installations of water mains and spill

containment areas. Another project completed during this time

included land clearing and construction of a flood corridor on

Mashipacong Island in Sussex County. Construction was performed

between two sections of the Delaware River which serves as a

sanctuary for Indiana Bats and American Bald Eagles. The project

was completed in areas of very sensitive wetlands.

Margaret Cervino died in 2000, but her successful stewardship

of the firm was an inspiration and excellent example for women who

aspire to work in the construction industry. Her accomplishments

were recognized in 2003 by the Utility & Transportation Contractors

Association of New Jersey which established a new scholarship

that bears her name. The Margaret Cervino Memorial Scholarship

is awarded on an annual basis at the New Jersey Institute of

Technology to a female student who majors in engineering or

construction technology. Certainly a worthy tribute to Margaret’s

legacy as a female business owner in a traditionally male-dominated

profession. Since 1974, her four sons: Michael, William, Anthony

and Augustus, have been involved with the company on a full-time

basis. William currently serves as President of Sanitary

Construction, Michael, Sr. is Vice President, Anthony is the

Secretary/Treasurer and Augustus is a field operator/foreman. A

fourth generation is also involved with the firm. Michael Cervino,

Jr. is the Assistant Treasurer and also involved with estimating and

project management, while Todd Cortese, Michael’s Sr.’s Son in

law, serves as Operations Manager and handles the company’s

financial aspects with Michael, Sr.

In recent years the company has transitioned its focus to large

scale site development projects for residential and commercial

clients. This turn-key construction includes demolition, earthwork,

utility installations, paving, striping and landscaping. From 2006-

2009, the contractor completed a site package for the expansion of

Morristown Memorial Hospital. This work required the installation

of foundations, construction of a new parking deck, paving, as well

as the widening and signalization of Route 124. At the same time,

Sanitary performed a similar type contract at Preakness Health Care

Center.

Another recent project was the installation of an eight inch ductile

iron fire suppression line which was placed under an active runway

A school project is completed in Morris County.

Walls and pond are constructed in Highland Park.

The firm is at work on a site work contract in Parsippany.An underground detention system is under construction in

Paramus.


and taxiway at Teterboro Airport. This construction also involved

the completion of a mechanical building and the installation of

hydrants. On a project at Newark Airport, Sanitary completed a

glycol recovery system as a subcontractor for Tilcon. This type of

system is utilized to de-ice airplanes that are situated over a catch

basin which collects and processes the glycol for recycling.

The firm has also completed site preparation for a wastewater

treatment plant and a pump station at the Prices Pit Landfill in

Pleasantville which required a 40 foot deep cofferdam and deep

well dewatering. Additionally, SCC forces recently completed a total

sewer collection system replacement in West Orange at a location

that once housed Thomas Edison’s laboratory, and constructed a

new culvert on Route 206 for Tilcon. The Route 206 project also

involved the installation of approximately 3000 linear feet of eight

inch force main as well as demolition of an existing bridge.

Some of the company’s current projects include two site work

subcontracts with Joseph A. Natoli Construction Corp. These

projects are for the construction of Paul Miller Auto Group’s new

Porsche dealership and the Bergen County Special Services Facility

located in Paramus. Sanitary is also completing the first phase of

work for Mill Creek Residential Trust’s 268 unit luxury apartment

building in Morristown and recently broke ground on the first phase

of a major commercial redevelopment project located on Passaic

Avenue in Kearny.

Throughout the years, Sanitary Construction Company has

persevered and continues to thrive in a challenging and ever

evolving construction industry. By adhering to the corporate values

which the company was founded on over 100 years ago and

cultivated throughout the twentieth Century by the Cervino family,

the next generation of the firm is sure to remain a respected player

in NJ’s construction industry for many years to come.

The Pleasantville pump station is completed for the US Army

Corp of Engineers.


Recently, I was fortunate to be named the top-ranking

Democrat on the US Senate’s Subcommittee on Surface

Transportation – a position that will enable me to work across

party lines to improve infrastructure in New Jersey and across

the country. And there isn’t a single New Jerseyan who

doesn’t count on some kind of federally funded infrastructure.

Currently, America is faced with a long list of transportation

projects that can’t get done because local officials don’t have

access to adequate funding. New Jersey’s businesses,

residents, and commuters are counting on us to find solutions

that sustain and improve our

nation’s highways, railways,

and waterways — networks

that are critical to economic

growth, job creation, and

national security.

New Jersey alone has more

than 38,000 miles of public

roads, and nearly 1,000 miles

of rail freight lines, connecting

every corner of the state to

consumers and networks

throughout the region. Sixty-

six percent of New Jersey’s

major roads are in poor or

mediocre condition. This costs

New Jerseyans over $3 billion

a year in extra vehicle repairs

and operating costs.

Across the United States,

65,000 bridges are classified as

structurally deficient and 65

percent of America’s major roads are rated in less than good

condition. Americans spend 5.5 billion extra hours of travel

time from traffic congestion annually, costing families $120

billion in fuel and lost time, and our businesses $27 billion in

extra freight. According to a report by Facing our Future, a

group of former New Jersey government executives, New

Jersey needs at minimum $21.3 billion to invest in short-term

transportation infrastructure needs through 2018.

It is this urgent and collective need that keeps me committed

to finding sustainable, long-term solutions to our nation’s

infrastructure funding crisis. Most recently, I introduced

bipartisan legislation that would give local officials more control

Senator Booker was elected to a full term in the United States

Senate in 2013. Prior to that Cory won a special election to fill

the term of the late Senator Frank Lautenberg- and became New

Jersey’s first African-American senator. Under his leadership as

mayor, New Jersey’s largest city, Newark, entered its biggest period

of economic growth since the 1960s – the first new downtown

hotels were constructed in 40 years, the first new office towers in

20. During Cory’s tenure, overall crime declined and the quality

of life for residents improved with more affordable housing, new

green spaces and parks, increased educational opportunities and

more efficient city services.

A Message FromUnited States Senator Cory Booker

over the transportation planning process in their states and

communities. The “Innovation in Surface Transportation Act,”

introduced by Senators Wicker, Casey and me, will create

new opportunities for economic growth by empowering cities

to compete for a larger share of federal funds. Local

jurisdictions, metropolitan planning organizations, transit

providers, and others would be in charge of developing projects

for consideration. Instead of people in Washington making

the decisions, a panel of local stakeholders would decide which

projects to approve based on how the project could improve

the transportation system,

promote innovation, and spur

economic development.

In order to advance New

Jersey’s economic dev-

elopment, it is vital that we

adopt policies that invest in our

transportation infrastructure.

This legislation will increase our

economic competitiveness and

fund necessary transportation

projects to promote the safety,

stability and economic strength

of our state and nation. These

issues are of tremendous

importance to growing our

state’s economy and creating

job opportunities for New

Jerseyans and I’m excited to

get to work.

Utility and Transportation Contractor, APRIL 2015 2 1

Financial Overview

START-UP SEASON:

HOW BANKS CAN REV CONTRACTORS’ ENGINESBy: William J. Ruckert, Provident Bank

Finally!! Spring has sprung and start-up season has arrived.

That’s the good news. The bad news is that contractors like you

may have to find a way to finance their operations for the next 120

days as work is done, expenses are incurred, bills are generated,

and payments are pending. For yet another year, the primary issue

for all contractors is seasonal cash flow, that persistent thorn in the

side.

Your winter repairs/ maintenance expenses have been paid,

accounts receivable are low, operating expenses are growing,

inventory is sorely needed—and your cash balances are being

depleted. The cash flow problem is only heightened this year by

terrible weather conditions—polar vortex, anyone?—that have

delayed and will continue to delay start-up.

Luckily for you, bankers are dedicated to ensuring that

contractors are adequately financed for the upcoming season. And

this time of year is critical. While your accountants are working

feverishly to complete year-end financials, your bank anxiously

awaits the statement. Bankers and surety agents depend on that

information to make decisions about your financing eligibility;

similarly, the public and private sector job owners rely on the

decisions of banks and surety agents when considering your bids.

Here’s the challenge: How do you make banks comfortable

lending to you given the weakening balance sheet and seasonal

losses? More importantly, what solutions can your bank offer

you?

Naturally, a working capital line of credit is the obvious choice.

But there are ideal alternatives designed specifically for the seasonal

start-up phase, including a seasonal override to an existing line of

credit, short-term time note, and/or moratorium on term debt

payments.

Seasonal overrides to lines of credit are commonplace in banking

and by no means unique to the construction industry. For example,

retailers typically employ them as they incur the costs prior to the

holiday season and await billings/payments. Sound familiar? The

override amount and time frame should mimic your cash flow cycle.

Typically, the cycle picks up after 6 months or less but varies based

on the unique need.

Specific short-term borrowings, also known as a time note, are

generally job-specific to ensure repayment. Interest is paid monthly

with full principal payment due at maturity, which benefits cash

flow as the job ramps up and payments are collected. These loans

can extend for up to one year, but be careful; you do not want the

timing of that lump sum principal payment to exacerbate your cash

flow crunch at this time next year.

A brief moratorium on term loan payments can also provide cash

flow relief. Repayment of the debt is not extended beyond typical

terms, but deferring spring payments helps you manage your cash

position. This loan structure should be negotiated ahead of time

because requesting a moratorium after the loan closes can unsettle

the bank.

Whichever solution is right for you is based on the unique

borrowing needs of your company and can be affected by several

factors, including the prior year’s results, an unexpected rush of

winter business (e.g. snow plowing), back-log, and the mobilization

costs associated with starting a new job.

No two borrowing needs are alike. Regardless of your company’s

unique financial condition, your banker should be intimately aware

of your situation prior to receiving year-end financial statements

so all parties are prepared to meet your company’s needs. All of

your cash flow issues can be overcome by open and active dialogue.

The lines of communication should flow between company

management, your accountant, surety agent and banker.

If you can’t have this kind of frank conversation with your bank,

then perhaps you should seek a new financial institution. Provident

Bank can be there for you: for start-up season and all seasons.

To learn more about start-up season financing options, please

contact the author.


Legislative News

FEDERAL & STATE UPDATEBy: Anthony Attanasio, Executive Director

UTCA enjoyed several legislative successes this winter but our

biggest initiative still remains unresolved. There continues to be a

tremendous amount of work ahead of us but here is a recap of some

of the issues the Association has been working on legislatively.

As we all know the single most critical issue our industry faces is

the renewal of the broken Transportation Trust Fund. The need to

renew the fund is undeniable, however there has been no major

action from the Christie administration to address this issue. The

Governor chose not to mention the TTF in either his state of the

state speech or annual budget address. Further, the Governor

proceeded to go on to his monthly radio show and say “there is no

crisis” and that he believes the TTF is “pretty well funded”. As

those of us in the industry know both of these statements are not

completely accurate. At a legislative hearing in March, UTCA

Executive Director Anthony Attanasio testified that “this is not

only a crisis but is in fact actually a catastrophe”. The trust fund

will have an annual debt service starting in FY16 of close to $1.2

billion while it only takes in a little over $900 million in cash leaving

a $300 million shortfall. That revenue is only enough to pay down

debt on old projects, therefore the State currently has no money for

future projects beyond the next fiscal year. Worse than that is the

fact that New Jersey’s bridges were recently ranked 6th worst in the

nation and our roads are also in unacceptable condition. The

administration has cobbled together funding for one more year

using more borrowed money and one shot funding sources that

will force the NJDOT to make decisions that could harm our industry

for several years. Senate President Sweeney, Assembly Speaker

Prieto along with Assembly Transportation Chairman John

Wisniewski have tried to keep the TTF as the main focus in Trenton

but the Governor’s silence on this issue is deafening. In February,

UTCA CEO Bob Briant, Jr. was invited to meet with the Senate

President and Speaker as part of an exclusive group of industry

leaders to work on a permanent solution to the TTF crisis. In addition,

Anthony Attanasio appeared on NJTV’s “On the Record with

Michael Aron” in March alongside Assemblyman Wisniewski to

continue to pound the drum. Anthony will also be moderating and

participating on several panels focused on the TTF at the

TransAction conference in Atlantic City this month. UTCA will

continue to work with the ForwardNJ coalition to lobby for a long

term, robust and sustainable funding source for the TTF.

In Washington D.C., there appears to be bipartisan support to

renew the federal highway trust fund. Leading members from the

Senate and House, both Republican and Democrat, continue to

highlight the need for a long term and adequately funded trust

fund. Congressman Frank LoBiondo (R-2), Congressman Bill

Pascrell (D-9) and Congressman Tom MacArthur (R-3) are

representing New Jersey well on the issue. Congressman

MacArthur has even co-sponsored a bill called the Partnership to

Build America Act of 2015 (H.R. 413). This measure establishes

the American Infrastructure Fund (AIF) to provide bond guarantees

and make loans to state and local governments, non-profit

infrastructure providers, private parties, and public-private

partnerships for state or local government sponsored

transportation, energy, water, communications, or educational

facility infrastructure. This requires proceeds from the sale of the

bonds to be deposited into the AIF. The bill would also amend the

Internal Revenue Code to allow U.S. corporations to exclude from

gross income qualified cash dividend amounts received during a

taxable year from a foreign-controlled corporation equal to the face

value of qualified infrastructure bonds the corporation has


purchased. We are encouraged that Congressman MacArthur is

working across the aisle on innovative new ways to fund

infrastructure projects in America.

On the legislative front, UTCA was successful in seeing several

of the bills the association supported and/or amended become law

and legislation we aggressively opposed vetoed by the Governor.

We are happy to report that the Permit Extension Act-A3815, has

been signed into law. This bill pushes back the expiration date of

current permit approvals to December 31, 2015. In addition, the

Governor signed The Water Infrastructure Protection Act-A3628

into law. This bill authorizes municipalities and municipal, county,

and regional utilities authorities to lease or sell their water or

wastewater assets to a private entity, without a referendum, if an

emergent condition exists. UTCA was able to secure several crucial

amendments to the bill that will benefit the industry. UTCA also

worked closely with a coalition of business, utility companies and

labor organizations to aid the passage of this bill including a last

minute push to secure the 21st “yes” vote for the legislation in the

Senate. We were also pleased that the Governor vetoed S1811,

also known as the Buy America bill. This proposal would have

required government contractors to use goods made in the United

States; and it required businesses that receive government contracts

or government assistance to disclose job exportation information.

This legislation, while well intentioned, would have slowed public

projects and added dramatically to the contractor’s compliance

costs. Additionally, these requirements would create more red tape,

would stall project decisions and could jeopardize relations with

New Jersey’s international trade partners. Finally, the bill could

potentially conflict with federal “Buy America” provisions which

could jeopardize federal funding on transportation projects. UTCA

coordinated with the State Chamber of Commerce, the NJ Business

& Industry Association and the New Jersey Department of

Transportation in opposing this legislation.

The UTCA continues to be the industry leader in both Trenton

and Washington D.C. and will continue to tirelessly advocate on

your behalf.

Continued from Page 45

While these attacks on the irrefutable public and economic

benefits that come from improved transportation infrastructure are

disappointing, these individuals and entities would not be stepping

up their efforts to kill a HTF fix if they too did not see progress

occurring.

The first step toward ending the eight-year cycle of dysfunction

that has plagued federal surface transportation investment and

disrupted the activities of the state that rely on these funds for, on

average, 52 percent of their highway and bridge capital

improvements was always going to be the launch of a national

debate. It has been clear over the last two months that this overdue

discussion has begun.

It is now up to Congress and President Obama to find a way to fill

the HTF’s $15 billion per year shortfall between available resources

and current levels of highway and transit investment. The positive

developments over the last two months have certainly laid the

foundation for such a solution, but we still have a long way to go.

It is the responsibility of the transportation construction industry

and all transportation stakeholders to build on these steps and

continue pushing Congress to act in a meaningful way to

permanently fix the HTF. As already noted, there are vocal and

committed groups working aggressively to defeat us in this effort

and you can bet Congress is hearing from them.

With the authorization of the highway and transit programs

expiring May 31 and the trust fund needing additional resources by

July, one way or another Congress will act in the next few months.

This means we have the attention of lawmakers and they are facing

a deadline, two things that always create an opportunity on Capitol

Hill.

For those of you who have not seen or do not remember the

movie, Bill Murray’s character in “Groundhog Day” broke out of

his time trap by beating the odds to achieve something meaningful.

In a similar spirit, it’s time to break out of the time trap and for

Congress and the President to achieve something meaningful and

permanent with the HTF.


Sonoma/San Francisco

Executive Seminar

Attendees Enjoy Great Weather & Beautiful Locations

The 2015 Executive Seminar proved to be one that the

participants will talk about for years to come. Throughout a week of

perfect weather, 100 UTCA members and their families enjoyed

touring the tranquil vineyards of Sonoma, California and the beauty

and excitement of San Francisco. Thanks to the research and

planning conducted by UTCA Board Member and George Harms

Construction President and COO Tom Hardell, the group enjoyed

wine tastings and tours of the Ledson and Artesa Wineries; the

Rodney Strong Winery with a stopover for lunch in the town of

Healdsburg; and a tasting and tour of the Benziger Winery featuring

a fantastic group dinner in their wine storage caves.

The Lodge at Sonoma Renaissance Resort & Spa became the

perfect spot for the members of the group to gather in the evening.

UTCA President Scott Lattimer noted that the ability to meet

informally with other industry members is invaluable. “Of course

the wineries and the tours are fantastic but the most enjoyable part

of the trip is to meet such a varied group of industry members and

build new relationships and discuss issues that impact all of us.

Meeting in the evening in the hotel lounge and spending time on

the buses and going out to dinner help to build relationships and

the overall strength of the Association. On this trip we had members

from the highway and utility contracting community; equipment

and material suppliers; metal fabricators and highway electrical

contractors; law firms, insurance, bonding and information system

companies; and engineering firms. I would encourage everyone in

the Association to attend these events and they won’t be

disappointed.” Newly appointed UTCA General Counsel Paul FaderGroup photo at the Artesa Winery.

George Pallas and Shawn Farrell discuss contract issues during

an interactive presentation.


of Florio Perrucci Steinhardt & Fader, LLC echoed this sentiment,

“Initially I and other members of our firm thought it was a good idea

to attend just to introduce ourselves to the membership but I can

say that in a short week we learned a great deal about the issues

affecting the association and have built new friendships.”

The Executive Seminars feature work sessions addressing various

topics of interest to the industry. George Pallas and Shawn Farrell

of Cohen Seglias Pallas Greenhall & Furman continued their tradition

of providing the group with valuable legal presentations. George

and Shawn’s interactive presentations and knowledge are always

well-received. This year’s presentation was entitled “How to Get

Paid For Extra Work” and copies are available at the Association

office.

Upon leaving Sonoma the group stopped at the picturesque

town of Sausalito to enjoy fantastic restaurants and strolling the

waterfront streets. San Francisco afforded the group the options of

touring Alcatraz, the waterfront and riding the famous cable cars.

Some of the group took advantage of the opportunity to play a

round of golf at the Spanish Bay course within Pebble Beach while

others enjoyed the day in Carmel-By-The-Sea, California.

The seminar presentations in San Francisco were given by UTCA

member Kevin Ellman of Wealth Preservation Solutions and

Riccardo Castracani of DEAL/RDE USA. The Association is always

grateful when Kevin can advise the group on emerging financial

management issues. His program this year concerned investing

and executive retention planning. Riccardo Castracani gave a

detailed presentation on the challenges his firm faced in producing

the pre-cast work for the construction of the newly completed San

Francisco-Oakland Bay Bridge. The construction techniques used

in building this massive segmented bridge were as impressive as

the bridge itself.

During the farewell reception UTCA CEO Bob Briant Jr. thanked

all of the sponsors of the seminar as well as the UTCA Executive

Seminar Committee and Committee Chairman Gerard Burdi and the

UTCA staff for arranging a fantastic program. He also announced

that the committee has selected the Casa de Campo Resort in the

Dominican Republic for the 2016 seminar and Paris/Barcelona for

2017. For additional information on the seminars or copies of the

presentations please contact the association office.

A Benziger Winery employee discusses their biodynamic farm-

ing techniques to produce ultra-organic wines.


Photo Caption: Gennaro Liguori receives his Hall Of Fame Award

from Joe Walsh in 2012.


THE CAVE-IN PROBLEMBy: David Kliwinski, CSP

Safety Perspective

Trench Collapse Kills 2

A father and son trenching a water line were killed when a dirt

wall collapsed and buried them. Both men were pronounced dead

at the scene of a housing subdivision under construction. According

to police, the accident was reported at 1p.m., and it was nearly 3p.m.

before the body of the second victim was finally recovered. The

accident occurred in a housing subdivision where road work and

one house where under construction. Interviews and evidence

disclosed that the ground was thick with mud the day of the incident

from recent rains resulting in unstable soil conditions.

Police said the workers dug a trench six to eight feet deep for the

pipe. The walls were not braced! Firefighters were first on the scene,

and the Deputy Fire Chief said one man was completely buried. The

partially buried man was pulled out but could not be revived. The

local public works department employees assisted firefighters in

directing the shovel operator in removing dirt and widening the pit

for the rescue attempt of the second victim. Police investigated the

accident for criminal negligence while the U.S. Occupational Safety

and Health Administration (OSHA) investigated the fatalities for

violations of compliance with regulatory standards.

The frequency and regularity of these types of fatal occurrences

during excavation work has been a concerning and on-going industry

challenge for many years. Management commitment, risk planning,

effectively executing proper means of employee protection, training,

regulatory compliance and budgeting money to perform this activity

safely are the primary contributing factors and root causes.

Cave-In Dangers

The greatest danger associated with trenching and excavation

work is the potential of cave-in or earth slides. Cave-ins are a primary

source of fatalities in the construction industry killing hundreds of

employees annually. Eliminating cave-ins should be the ultimate

goal of every contractor, and this goal can only be supported if

supervision and workers are aware of the risk associated with their

work, and have knowledge of the tremendous force created during

a cave-in. For example, a cubic yard of soil weighs approximately

2700 pounds (in dry conditions). And, the average cave-in typically

results in the collapse of 3 to 4 cubic yards of soil weighing 8000 to

10000 pounds. Since the average person is unable to breathe when

their chest is covered with 150 pounds of soil, survival under these

conditions is unlikely.

Factors Contributing to Cave-Ins

Trenching cave-ins occur because the strength of the soil in the

trench wall is not sufficient to withstand the pressure exerted by

the surrounding earth. Several factors affect the soil’s strength to

ultimately cause a cave-in. The 4 most significant factors

contributing to cave-ins include: 1) weight 2) water accumulation,

3) vibration and 4) soil composition. Excessive weight caused by

surcharge loads such as spoil (excavated soil), construction

equipment and materials, and the removal of soil beneath structures

in the vicinity are responsible for excessive loads on trench walls

creating cave-ins. Water accumulation is one of the greatest

dangers because the presence of too much can substantially weaken

the soil. Too little water can cause a stable appearing soil to become

brittle and crumble causing a cave-in. Vibrations caused by nearby

road traffic and construction equipment, along with blasting and

pile-driving activities weaken the soil creating cave-in potential.

Finally, soil composition is a crucial factor because it involves

various types of soil possessing different strengths. Hard compact

soils (cemented sand and gravel) exhibit characteristics similar to

rock and are much stronger than sandy or loose soils. A “Competent


Person” (knowledgeable and experienced in trenching activities)

should be responsible for evaluating existing soil conditions and

recommending the appropriate measures to ensure trench stability

during construction work. This individual is responsible for

inspecting the trench daily for unsafe conditions (changing

conditions), and ensuring that support systems are provided and

maintain their engineering quality and performance.

The most common cause of cave-in accidents are : 1) inadequate

or lack of protective shoring systems, (usually in an attempt to cut

costs or save time) 2) inability to accurately assess soil conditions

3) failure to consider changing weather conditions 4) failure to

properly locate heavy loads away from trenches/excavations 5)

poor planning and 6) improper or inadequate training.

Danger Signs Related to Cave-Ins

To ensure safe trenching operations contractors should take

action to mitigate the following existing dangers:

· Spoil, material or equipment closer than 2 feet from the trench

edge

· Experience level of the Competent Person, supervision and

employees

· Bulges on side walls of the trench

· Accumulation of loose rocks or material fallen from the

trench walls

· Cracks in the soil near the surface of an excavation

· Water in the bottom of a trench and rainfall activity

· Subsidence (a shrinking or vertical movement of the soil)

· Layered soils

· Previously excavated soils

· Intersecting trenches

· Narrow right of way limiting workers freedom of movement

Any one or a combination of these danger signs should prompt

immediate corrective actions. Many accidents can be attributed to

improper installation and removal of shoring, and the anxious nature

of employees to enter a collapsing trench to prematurely attempt

rescue. Proactive measures that address the risk and associated

hazards is necessary to drive the safe execution of excavation and

trenching activities.

Conclusion

Cave-ins continue to be a prevalent problem in the construction

industry requiring the immediate attention of both management

and employees, and industry constituents. The limited resources

of government agents (e.g. OSHA compliance officers) often

preclude the inspections required. These agencies are usually

understaffed, distrusted and usually only contacted after a tragedy

has occurred. Ultimately, compliance should not be the driving

factor for providing employees the safe work environment they are

legally required to be provided. The contractor has the primary

responsibility for Safety including for the humanitarian, financial

and legal reasons associated with the work being performed. Each

contractor should be of the mindset to create a culture of caring for

the safekeeping of all employees performing work so it becomes a

value that permeates the entire organization, and that drives the

safe performance of work. A company’s ultimate goal should be to

ensure the protection of their greatest asset, and to return each

employee home safely to their loved ones.

· Increased seepage of subsurface water

· Drying of exposed trenches


Firm Provides Support Services To Contractors

Featured Article


HIGHWAY TRUST FUND:GROUNDHOG DAY OR NOT?

By: Dave Bauer

ARTBA Senior Vice President Of Government Relations

In the early 1990s movie “Groundhog Day”, Bill Murray plays a

character that keeps reliving the same day. No matter what Murray’s

character does during that day, the next morning he wakes to the

same song from his alarm clock and the day proceeds just as the

others.

This bit of pop culture has become a too frequent metaphor for

the past eight years of Highway Trust Fund (HTF) dysfunction

where each cycle begins with a projection of when the fund will be

unable fulfill its obligations and ends with Congress approving last

minute legislation to temporarily preserve highway and public

transportation investment. Then the clock starts ticking on the

next crisis.

As we count down to the sixth HTF revenue shortfall in eight

years, a number of developments have already ensured that we are

not reliving the same trust fund cycle.

Certainly, the U.S. Department of Transportation’s projection

that—without additional revenues—it will need to start slowing

down reimbursements to the states in July due to trust fund liquidity

constraints and insolvency looming in September very much bring

to mind the premise of Groundhog Day. The difference between

this situation and the previous five trust fund shortfalls, however,

is the vast recognition by members of Congress of the need for

action and the priority the congressional leadership has placed on

passing a surface transportation bill. The day after the 2014

elections, both House Speaker John Boehner (R-Ohio) and incoming

Senate Majority Leader Mitch McConnell (R-Ky.) cited

infrastructure as one of the few areas where the new Republican

Congress could find common ground with President Obama. Since

the 114th session of Congress convened in January, passing a

surface transportation reauthorization bill has been consistently

listed as one of the “must do” items by members of both chambers

and parties.

Perhaps one of the brightest spots in terms of distinguishing the

2015 HTF crisis from those in 2008, 2009, 2010, 2012, and 2014, is

that this time around all parties are actively seeking a solution.

Most members of Congress now clearly understand they cannot

deliver a long-term surface transportation bill until the find a long-

term solution. Senate Finance Committee Chairman Orrin Hatch (R-

Utah), Environment & Public Works Committee Chairman Jim Inhofe

(R-Okla.), Commerce Committee Chairman John Thune (R-S.D.), and

Foreign Relations Committee Chairman Bob Corker (R-Tenn.) have

all publicly said they are evaluating all options—including a federal

motor fuels tax increase—to generate additional HTF revenues.

In the House, Representatives Reid Ribble (R-Wis.), Dan Lipinski

(D-Ill.), Tom Reed (R-N.Y.), and Bill Pascrell (D-N.J.) generated a

letter from 285 House members—including a majority of both party—

urging the House GOP and Democratic leadership to make

developing a long-term HTF plan a priority.

While the Obama Administration has long advocated for increased

federal surface transportation investment, the President’s FY 2016

budget for the first time includes a specific plan to generate the

resources necessary to pay

for his highway, transit, and

passenger rail spending

proposal. The Adminis-

tration’s plan to allocate $238

billion generated over six

years by requiring U.S.-

based multinational

companies to “repatriate”—

or declare as U.S. revenue—

profits earned overseas has

generated mixed responses on Capitol Hill, but no one disputes

that this mechanism would generate real revenue.

The complications with this proposal is primarily based on the

need for a broad re-write of the U.S. tax code—a major lift in any

environment—to make the repatriation construct work.

Furthermore, many on the congressional tax committees and in the

business community want revenue generated from corporate tax

reform to be used to lower corporate tax rates. Regardless of the

prospects of using repatriation revenues to support transportation

investment, the fact that the President and his team has forwarded

a HTF solution is further evidence of the different environment in

2015 than in years past.

It should also be noted that forces outside of Capitol Hill have

highlighted the nation’s infrastructure challenges and the need for

congressional action. The CBS news program “60 Minutes” ran a

lengthy segment in late November about the deterioration in the

nation’s highways, bridges and other infrastructure facilities. Since

January, editorials in the “Washington Post,” “USA Today,” “New

York Times” and other major publications have endorsed a gas tax

increase to generate the resources needed to begin improving the

country’s roads, bridges and public transportation facilities.

According to Sir Isaac Newton’s Third Law of Motion, for every

action there is an equal and opposite reaction, While Newton

focused on physics, his insight also applies to politics. The long-

time opponents of federal highway and transit investment have

definitely noticed the momentum towards a solution for the HTF

over the last two months and have accelerated their activities to

derail this progress.

Professional conservative groups, such as Heritage Action and

The Club for Growth, were part of a letter signed by 50 self-titled

taxpayer advocates and free market organizations that wrote to

Congress in February opposing a gas tax increase and brandishing

unsupported claims of wasteful federal highway spending. The

“Wall Street Journal” also recently wrote a lengthy editorial calling

for abolishing the federal gas tax and forcing states to handle

highway and bridge needs on their own. The Journal is also allowing

other conservative pundits to run op-eds decrying a gas tax increase

and further criticizing the value of federal highway investment.

Continued on Page 25


Continuing A Proud Tradition

Featured Article

DW SMITH ASSOCIATESCELEBRATES 50 YEARS IN BUSINESS

There are few privately owned professional consulting firms

that were established in New Jersey in the 1960’s which are still in

business. Many firms that got their start in those years are now

publicly owned or no longer active today. DW Smith Associates is

a firm that is celebrating 50 years in business and has remained

privately owned over the years.

DW Smith Associates, LLC has experienced unique success and

development since it was first established in July 1965 by Donald

W. Smith. The commitment to innovative, environmentally-sensitive

and cost effective designs established in 1965 has remained the

core philosophy of the firm today.

In the early years, the firm provided various professional services

throughout Ocean County, including work on various sites for

Leisure Technology Corporation and K. Hovnanian Enterprises.

The firm continued to play a major role in providing consulting

services for the development of a multitude of adult communities

throughout Central New Jersey. The decades of the 80’s and 90’s

found the firm continuing to prosper in the private sector, while

expanding its services in the public sector throughout New Jersey.

Some of the firm’s new efforts included municipal work, parks and

the development of some unique recreational communities that

required the firm to meet several environmental challenges.

Approximately 15 years ago, Jennifer Nevins became an owner at

DW Smith Associates, LLC. She joined the firm in 1988 and currently

serves as President of the company. Ms. Nevins has contributed to

the success of the firm over the past 27 years and currently oversees

the firm’s business operations with a focus on quality assurance

and control, strategic planning and project management, specializing

in Community Association and Utility services. She has received a

number of recognitions for her hard work and dedication as a woman

Pictured together are company founder Donald W. Smith and cur-

rent President Jennifer Nevins.

Pictured left to right are the firm’s owners; Thomas Murphy, Timo-

thy Lurie and Jennifer Nevins.


business owner, including being named Enterprising Woman of the

Year by Enterprising Women Magazine and as one of the Top 25

Women in Business by NJ Monthly.

Joining Ms. Nevins in leadership roles are firm Principals Timothy

Lurie, PE, PP, CME and Thomas Murphy, PLS. Mr. Lurie has served

with the company since 1996, specializing in Civil Engineering,

Municipal Engineering and Planning with extensive experience in

Land Development, Landfill Design, ADA Analysis, Environmental

Permitting and CAFRA Design. He has been highly involved in the

restoration of Monmouth and Ocean counties following Superstorm

Sandy and continues to support efforts to repair and rebuild the

Jersey Shore.

Mr. Murphy joined the company in 1997, specializing in

Construction Surveys, GPS Surveys, NJDOT Highway Surveys,

Right-of Way, Bathymetric and Route Surveys with extensive

experience in Land Title Records Research, Survey Mapping and

CADD Calculations. He has also been instrumental in expanding

the firm’s survey department focus on infrastructure and utility

projects. Together the partners have assembled a talented workforce

to ensure project success for the firm’s clients.

Today, DW Smith Associates is a certified WBE/SBE/DBE

Professional Consulting firm that provides Construction

Management, Engineering, Planning, Surveying, Landscape

Architecture, Environmental Permitting, and Community

Association services. The firm offers comprehensive expertise and

quality services for projects of varying sizes and complexity.

As DW Smith Associates has progressed, the firm has seen

tremendous growth in recent years and has been able to significantly

expand its talent base. In addition, longtime Associates Kevin

Murphy, Syed Husain and John Harper continue to offer their

extensive professional experience, along with recent addition Lynn

Voorhees, Director of the Community Association division. The

company had also benefited from the experience of its founder,

Donald W. Smith, for 49 years until his passing in late 2014.

The most recent 15 years have been especially active for DW

Smith Associates under the new management team. Activities have

continued in both the private and public sectors throughout New

Jersey as well as in New York and Pennsylvania. Some of these

projects include planned community development, waterfront

development, affordable housing, recreational facilities, professional

sports complexes, roadway and right-of-way work, utility and

natural gas transmission lines, airport development and dam and

bridge work.

Some current and recently completed projects include the

Lakewood Blue Claws Stadium, Hoffman’s Marina in Brielle, Four

Seasons at South Knolls Adult Community in Jackson Township,

Hickory Farms Community in Berkeley Township and Manahasset

Creek Park in Long Branch, a project for which the company received

a Distinguished Engineering Award from NJ Alliance for Action in

2013.

DW Smith Associates is currently providing land surveying

services to Ocean County as part of the Route 526 roadway

improvement project. The firm is also providing route, construction

and as-built survey services for natural gas pipeline infrastructure

in New Jersey, New York and Pennsylvania. Current efforts also

include providing construction stakeout survey services to The

EPH Group for a planned 251 single family home development in

Howell.

In addition, construction layout services were recently completed

for Caruso Excavating as part of the Asbury Park Waterfront

Redevelopment project and for Earle Asphalt Company as part of

the New Jersey Turnpike Authority’s Garden State Parkway

Interchange 88 Improvement project.

What we have witnessed at DW Smith Associates in recent

years is a resurgence of top flight, professional consulting services

through the management and leadership team of the company. This

explains the numerous accolades bestowed upon the firm, including

its recent recognition as one of the Top 100 Diversity Owned

Businesses in NJ and one of the Fastest Growing Privately Held

Companies in America. The DW Smith team is excited to be

celebrating the company’s 50 year anniversary and continuing the

proud traditions of the firm.

Working for Caruso Excavating, DW Smith provided construction

layout services for the Asbury Park Waterfront Redevelopment

project.

The firm provides construction stakeout survey services in prepa-

ration for a development in Howell.


Legal Dig

CALCULATING YOUR AGGREGATE

WITH A NEW TWISTBy: Paul T. Fader, Association Legal Counsel

Recently, in Dobco Inc. v. Brockwell & Carrington Contractors,

Inc., (hereinafter “Dobco II”) a New Jersey trial court considered a

case of first impression regarding whether a low bid on another

contract, which has not yet been the subject of a contract award,

must be disclosed at the time of bidding a contract subject to a

DPMC “aggregate rating” limitation. The DPMC aggregate rating

establishes a dollar cap on the volume of work that a contractor

may become obligated to perform. The contractor’s available

bidding capacity is calculated by deducting the value of its

uncompleted work, as certified in its Form DPMC 701, from its gross

aggregate rating. Evidence of completed work consists of an owner-

approved invoice or “other similar documentation”. N.J.A.C. 17:19-

2.13(c).

In a prior Dobco case, i.e., Brockwell & Carrington Inc. v. Kearny

Board of Education 420 N.J. Super. 273 (App. Div. 2011) (hereinafter

“Dobco I”), the court held that an aggregate rating bidding

requirement extended to both the bidder and the bidder’s bid-listed

subcontractors. In Seacoast Builders Corp. v. Jackson Twp., Board

of Educ. 363 N.J. Super. 373 (App. Div. 2003), the court ruled the

contractor must have the needed bidding capacity both at bid time

and at the time of contract award.

In the instant case, Dobco II, Dobco challenged the

responsiveness of two low bidders, who had bid-listed the same

electrical subcontractor (Sal Electric), arguing that Sal Electric’s

subcontract exceeded its bidding capacity because it was also the

electrical subcontractor of a low bidder (Torcon) on another

unrelated contract, which, if ultimately awarded, would diminish

Sal Electric’s bidding capacity to the degree that the instant

subcontract exceeded its capacity. The low bidder and Sal Electric

argued that Sal Electric’s anticipated Torcon subcontract did not

have to be disclosed at bid time because the Torcon contract had

not then been awarded. Theoretically, such contract might never

be awarded due to a successful bid protest or a possible rejection

of all bids, or the award may be delayed to the point that, when

actually awarded, it would not, due to an intervening diminution of

its work backlog, be a non-issue.

The trial court upheld Dobco’s bid challenge and Dobco, the

third low bidder, was awarded the contract. The court reasoned

that Sal Electric’s expected Torcon subcontract ought to have been

disclosed in its Form DPMC 701 certification and that its non-

disclosure precluded any post-bid evidence that its aggregate rating

would not be exceeded. In support of its decision the court observed

that non-disclosure would create havoc because public owners

would not be able to expeditiously determine bid capacity. Further,

in light of the Seacoast Builders case, Sal Electric had to have the

needed bidding capacity at time of bid and at the time of contract

award. The court concluded that if the Torcon contract was awarded

then the subcontractor’s bidding capacity under the instant

subcontract, would be exceeded.

The court also touched on, but did not decide, the issue of how

to determine completed work for purpose of a DPMC-aggregate-

rating analysis. The trial court, noted that, because a contractor

might submit an inflated or unsent invoice in order to increase its

bidding capacity, some indicia of owner approval of its invoice

should be required.

The takeaway from Dobco II is that bidders on contracts

governed by the DPMC rating ought to: (1) disclose in their DPMC

701 any low bid it has previously submitted, but as to which there

has been no contract award; and (2) ensure that no bid-listed

subcontractor has any such pending low bids that it has failed to

disclose in its DPMC 701 submitted with the bidder’s bid package.

The information contained herein is for informational purposes only as a service to the

public, and is not legal advice or a substitute for legal counsel, nor does it constitute

advertising or a solicitation.


By: Nancy Damato, Partner, RDA Benefit Services

AFFORDABLE CARE ACT:Understanding The Employer

Reporting Requirements

The Employer Reporting provisions under the ACA (Patient

Protection and Affordable Care Act/Obamacare) requires

employers, insurers and carriers, and other reporting entities

to complete specific forms and report this information to the

IRS, in order to enforce the individual responsibility and

employer shared responsibility (“Pay or Play” provision), as

well as reconcile subsidies.

WHO HAS TO COMPLY WITH THIS REPORTING

REQUIREMENT?

These reporting requirements under Sections 6055 and 6056

apply to all Applicable Large Employers (ALEs), which is

any employer with 50 or more full-time equivalents. It is also

important to note that ALEs must report even if they are

insured in the small group market, are an uninsured group, or

even self-insured. Self-insured small employers (with fewer

than 50 employees) must also comply with the reporting

requirements of Section 6055.

WHAT INFORMATION MUST BE REPORTED ON

THESE FORMS?

Information to be tracked on a monthly basis for every month

in 2015 and reported to the IRS includes:

· Which months an employee and their dependents were

covered under your group’s health plan

· The cost of the employee’s share of the lowest monthly

self-only insurance coverage

Keep in mind that the information needed for this reporting

may come from several different sources, such as payroll,

HRIS, and time and attendance records.

So, it is very important to start collecting this data on a

regular basis now.

WHEN DOES THIS REPORTING NEED TO BE

DONE?

Employers must provide statements to each full-time

employee on or before January 31, 2016. Forms need to be

filed with the IRS on or before February 28, 2016. (If filing

electronically, then by March 31, 2016.) You should also be

aware that there will be penalties for failure to file the forms

with the IRS or provide statements to employees.

Don’t delay! Make preparations now to collect all the

data needed for this important ACA requirement. To answer

detailed questions, please visit: http://www.irs.gov/Affordable-

Care-Act/Employers/Questions-and-Answers-on-Employer-

Shared-Responsibility-Provisions-Under-the-Affordable-

Care-Act.

For more information, please feel free to contact Nancy

Damato, RDA Benefit Services, LLC at 609-693-0772 or

[email protected].

The information in this article is intended as an overview and is

for informational purposes only.


Labor Relations

NEW JERSEY’S “BAN THE BOX” LAW TAKES EFFECT:

WHAT EVERY CONTRACTOR SHOULD KNOW

By: Jill Tobia, Esq., Tobia & Sorger

On March 1, 2015, the “Opportunity to Compete Act”, which

was signed by New Jersey Governor Chris Christie this past

August, took effect. This Act, which is often referred to as the

“Ban the Box” law, prohibits a covered employer from asking a

job applicant about his or her criminal background during the

initial hiring process, including on a job application form as

well as in an interview. However, the Act still permits employers

to conduct background checks and to use the information

contained therein as part of an employer’s ultimate hiring

decision after the initial application process.

Since criminal background checks have become an almost

standard part of the hiring process, the Act impacts the majority

of employers in New Jersey. Furthermore, while certain

positions are exempt, the majority of job positions maintained

by UTCA Contractors fall under the Act. Therefore, as this

law is now in effect, and there are fines and penalties imposed

for violations, UTCA Contractors should familiarize themselves

with the requirements of the “Ban the Box” law and adjust their

hiring processes accordingly.

Overview of New Jersey’s “Ban the Box” Law:

The New Jersey “Ban the Box” Law prohibits a covered

employer from inquiring about a job applicant’s criminal history

during the initial hiring phase of the application process. This

means that a covered employer may not have a question relating

to criminal history on a job application form nor may the

employer ask the applicant about his or her criminal background

during an interview. However, an employer still may conduct a

criminal background check prior to extending an offer of

employment to an applicant and may also use the information

revealed in such a background check to deny employment to

an individual.

The Act applies to all employers doing business in New Jersey

who employ fifteen (15) or more employees during a twenty

(20) calendar week period. The Act does contain an exemption

for job positions, such as law enforcement and judiciary, which

by law may not be held by persons with criminal records.

Similarly, an employer may be exempt if its business activities

would be compromised by law or regulation if it employed

persons with criminal backgrounds. The Act will be enforced

administratively with civil penalties of $1,000 for a first violation,

$5,000 for a second violation, and $10,000 for any subsequent

violations.

Advice for UTCA Contractors:

Given that the law just went into effect on March 1, 2015,

there are many unknowns surrounding both practice and

enforcement. The fact that there is a line drawn between the

initial hiring phase, during which inquiries regarding criminal

history are prohibited, and the final employment decision, where

criminal background information can be considered, creates a

lot of uncertainty regarding the use of said information.

Accordingly, all UTCA Contractors should review their hiring

procedures and develop an application process that balances,

consistent with the Act, an applicant’s right to have access to a

position regardless of his or her criminal history and an

employer’s right to consider an applicant’s criminal history

before making a final employment decision.


CAPTIVE INSURANCE:

A VIABLE STRATEGY TO REDUCE COSTSBy: Michael Mazur; Mazur, Krieghbaum & Higgins CPA’s

Accounting Corner

The high cost of insurance is an issue for most companies. New

Jersey business owners rank health insurance as their number one

cost concern according to the New Jersey Business and Industry

Association 2015 Business Outlook Survey. Other concerns include

the cost of workers compensation insurance, wages and labor, taxes

and frivolous lawsuits – all of which contribute to increased

insurance premiums.

Nationwide, executives in the construction industry echo the

concerns of New Jersey business owners. The Wells Fargo 2015

Construction Industry Forecast revealed that contractors are also

concerned about the cost of wages and labor, equipment, healthcare

benefits, insurance and taxes.

A strategy used by 90 percent of the Fortune 500 companies to

help control the cost of insurance is to form a captive insurance

company (captive). This is an insurer wholly owned by a parent

company which provides insurance to its parent and related

companies. Captives are generally used to augment existing

commercial policies and provide insurance for risks not covered by

traditional insurance.

Captives can cover everything from general and umbrella liability

to workers compensation, regulatory changes and legal defense.

Some companies are beginning to use captives to fund employee

benefit programs like life and disability insurance, retirement and

healthcare benefits. Other types of insurance captives offer include:

employment practice liability, contractor liability, director/officer/

employee liability, contractual liability, property damage and

business interruption, fiduciary liability, equipment, and protection

against pollution, mold and other environmental claims.

Generally, any type of definable and measureable risk can be

covered by a captive as long as the state or country in which it is

domiciled (i.e. incorporated, licensed, managed and operated) allow

the line of business to be underwritten. Contractors can custom

tailor insurance policies to cover their specific needs.

Captives can also be used to decrease the cost of commercial

policies. Contractors can elect to reduce premiums by increasing

deductibles and then have the deductible paid through the captive.

In the past, captives only made sense for companies with at least

$100,000 in insurance premiums and more than $10 million in revenue.

Today, it is possible for smaller contractors to form their own captive

due to declining capital requirements and operating costs. Ideal

candidates are businesses with: $500,000 or more in profits, multiple

entities, risk currently uninsured or underinsured, and interest in

protecting its assets while possibly minimizing its tax obligation. A

properly structured captive offers both added insurance coverage

and numerous tax planning opportunities, including but not limited

to:

* Tax deductions on insurance premiums paid to the captive

* Lower income taxes

* Possible tax saving on shareholder dividends

* Further opportunities for estate and gift planning

Smaller captives may qualify to be exempt from federal income

tax on operating income. Under U.S. Internal Revenue Code section

831(b), a captive with a gross premium income of $1.2 million or less

that makes an election under that section is not taxed on premium


About The Author: Michael A. Mazur, CPA, CFF, PSA specializes in

working with contractors. Contact Mike at (732) 341-3893 or

[email protected] to answer your questions on captives.

income but is taxed on investment income. In other words, when

set up in line with IRS guidelines, a captive can receive up to $1.2

million in premiums tax free from its parent company. The parent or

affiliate company can then take a deduction for the amounts paid to

the captive as a legitimate business expense.

The captive can make a profit if claims are less than the premium

paid by the company. A portion of the profits can then be reinvested

to avoid ordinary income taxation. Or, the funds could be disbursed

to the company’s shareholders as a qualified dividend which would

be taxed at a lower rate. Even so, there is always the risk that claims

against the company could be higher resulting in a loss. Therefore,

it is important to consider what risks to insure under the captive

instead of a commercial policy.

Many contractors join a group captive where a number of

businesses come together to form their own insurance company or

an association captive which is established by a trade group for the

benefit of its members. Participating in a group or association captive

allows its members to share, in some degree, the collective risks, as

well as the benefits such as potential investment earnings and

profits from premiums paid in excess of claims. Since group members

make a commitment to minimize risks, participation also serves as a

risk management tool.

As with any business strategy a contractor should consult with

legal counsel, as well as accounting, insurance and other

professionals before establishing a captive. Contractors need to be

fully aware of compliance and funding requirements, as well as IRS

regulations. It is important to carefully consider all of the costs,

risks and benefits to ensure that a captive is right for your company.

Utility and Transportation Contractor April 2015

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Transcript of Utility and Transportation Contractor April 2015