It’s no surprise that women are underrepresented in the construction industry. The latest statistics published by the U.S. Bureau of Labor Statistics reveal that women make up about 10 percent of the workers in the industry. Employers in the construction industry have made significant progress toward creating safe and productive workplaces, but the lack of women in the industry and on jobsites, combined with an increased focus on discrimination, harassment, and sexual violence faced by women at work, should cause all employers in the construction industry to take notice and review their policies and procedures.

The Equal Employment Opportunity Commission (EEOC), the federal agency responsible for enforcing federal laws prohibiting employment discrimination, is paying particular attention to what it believes is “severe and pervasive” discrimination in the construction sector directed towards women and people of color. In May of 2022, the EEOC held a hearing to discuss discriminatory practices in the construction industry and has, since then, filed several lawsuits against construction industry employers in a targeted attempt to shine the spotlight on the industry.

In addition to increased scrutiny by the EEOC, the last few years have seen several new state and federal laws focused on improving working conditions for women and increasing gender equality in the workplace.

For example, under Oregon’s Workplace Fairness Act, every employer, regardless of size, must now have a written discrimination and harassment policy. The policy must provide a mechanism for employees to make a complaint, must identify one primary and one alternate individual designated to receive complaints, must inform employees of the five-year statute of limitations applicable to a legal claim, and must advise employees to document any incident of illegal conduct. The Act also makes it unlawful to prevent current and former employees from discussing allegations of unlawful harassment or discrimination that occur in the workplace or at work-related events through nondisclosure and nondisparagement agreements. Confidentiality is only permissible if requested by the employee.

The Oregon Equal Pay Act is designed to promote pay equity based on sex and other protected classes such as race, color, religion, sexual orientation, national origin, marital status, veteran status, or disability. Under the Act, employees performing comparable work must receive equal pay unless the difference is based on a seniority system, a merit system, a system that measures earnings by quantity or quality of production, including piece-rate work, workplace location, travel, education, training, or experience. Moreover, comparable work involves work that requires substantially similar knowledge, skill, effort, responsibility, and working conditions in the performance of work, regardless of job description or job title. Construction industry employers should analyze any potential pay disparity between men and women (and other protected classes) working in comparable jobs and should take steps to remedy any potential disparity that cannot be explained by a legally permissible factor.

Two new federal laws enacted in 2022 expand protections for pregnant workers. The Pregnant Workers Fairness Act, which goes into effect on June 27, 2023, gives workers the right to receive reasonable accommodations, like light duty, breaks, or a stool to sit on, for pregnancy, childbirth recovery, and related medical conditions, including lactation, unless it would be an undue hardship on the employer. The Providing Urgent Maternal Protections (PUMP) for Nursing Mothers Act expands breastfeeding accommodations to exempt employees.

Finally, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act preserves an employee’s right to litigate sexual assault and/or sexual harassment claims in court making pre-dispute arbitration agreements optional for these claims.

While employers in the construction industry have made great strides in ensuring workplace safety and equality, they can and should take further steps to prevent gender inequality, which may lead to sex-based discrimination and/or harassment claims. First and foremost, it’s important to implement policies and procedures designed to prevent, detect, and remedy unlawful harassment. Second, it’s important to train all employees on appropriate behavior in the workplace. Third, it’s important to take complaints seriously, to investigate them, and to implement corrective action designed to end harassment. Finally, it’s important to review your hiring practices, opportunities for promotion, and pay for women in the workforce. Although there are no guarantees when it comes to litigation, being proactive will help prevent and defend costly litigation.

April L. Fredrickson is a partner with Miller Nash LLP and represents public and private employers throughout Oregon and Washington in all areas of labor and employment law. She advises clients on a broad range of workplace and employment issues, including employment policies and practices, state and federal leave laws, wage and hour compliance, disability accommodation, employment discrimination, harassment and retaliation claims, predictive scheduling compliance, and employee discipline and termination. April can be reached by phone at 503-205-2536 or by email at april.fredrickson@millernash.com.

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By Ryan C. Hall, Miller Nash LLP

More than two years removed from the first reported case of Covid-19 in the United States, the construction industry continues to cope with the pandemic’s lasting effect on the costs of new construction projects. These impacts include soaring construction material costs, a diminishing supply of construction labor, and lingering disruptions to supply chain channels. Together, these forces resulted in skyrocketing construction costs across both the commercial and residential construction landscape.

As a consequence, project owners and construction contractors have exercised a new degree of vigilance, closely monitoring and documenting claims for increased project costs. This new landscape has often fostered an adversarial dynamic on projects, with both owners and contractors facing unprecedented pressures to track construction spending and cut costs where possible. More than ever, cost concerns have become an issue of contention before, during, and after project completion.

This dynamic between owner and contractor will face new challenges ahead as costs become less predictable, potentially returning to near pre-pandemic levels. Recent trends concerning construction material costs demonstrate extraordinary volatility, with the cost of lumber dropping from $1,400 per 1,000 board feet in March 2022 to $640 per 1,000 board feet in May 2022. This decrease comes on the heels of lumber prices reaching an all-time high, topping $1,500 per 1,000 board feet in May 2021.

Although unpredictable material costs have the potential to create animosity between an owner and contractor, they can also be an opportunity for the parties to pursue mutually beneficial cost savings on projects where the contractor is paid for the cost of the work plus the contractor’s fee. This can be accomplished through the addition of a shared savings clause to the parties’ contract.

A shared savings clause is an agreement between the owner and contractor providing that the contractor will be paid a percentage of the difference between the actual construction costs incurred, plus the contractor’s fee, and the guaranteed maximum price. These clauses can be either simple or detailed, depending on the parties’ needs. While the language of a shared savings clause should be specifically tailored to the needs of both the parties and the project, an example of a basic clause is as follows:

* Upon final completion of the Work, if the total Contract Sum is less than the final Guaranteed Maximum Price (GMP), then the difference between the GMP and Contract Sum (the “Savings”) will be divided among Owner and Contractor as follows: (a) 50% of the Savings will be retained by Owner, and (b) 50% of the Savings will be paid to Contractor.

Shared savings clauses have many benefits. First, they incentivize the contractor to monitor and control construction costs, as the contractor has the opportunity to recognize a direct financial benefit from any cost savings realized on the project. The greater the percentage of the cost savings that the contractor will receive, the more likely that the contractor will be motivated to pursue cost savings. This demonstrates another key benefit of a shared savings clause: it provides flexibility by allowing the parties to negotiate the percentage of the cost savings that will flow to the contractor. During contract negotiations, a contractor may be willing to concede its position on other contested contractual provisions in exchange for an increase in its share of the cost savings, and the same is true for the owner.

Lastly, and perhaps most importantly, a shared savings clause ensures that both the owner and contractor are working toward the same goal: the delivery of a completed project that is within, if not below, budget. This not only increases the likelihood of cost savings on the project, but it also can help reduce claims between the owner and the contractor and ensure that they maintain a cooperative, amicable working relationship. Given the constantly evolving pressures in today’s construction industry, this is an invaluable benefit.

That is not to say that a shared savings clause is without its drawbacks. While a shared savings clause may help foster a collaborative working relationship between the owner and general contractor, it may also motivate the general contractor to take a more forceful approach with its subcontractors, given that a subcontractor’s failure to complete its scope of work on time and on budget may negatively impact the general contractor’s ability to share in any cost savings. Likewise, disagreements may arise as to the calculation and timing of payments under a shared savings clause, prompting the need for careful drafting and clear expectations between the parties.

Project owners and construction contractors should therefore have legal counsel review their construction contracts and evaluate whether a shared savings clause would be appropriate under the circumstances. While such a clause may not be necessary on every project, it can be highly beneficial if utilized and drafted correctly.

Ryan C. Hall is a construction and insurance recovery attorney with Miller Nash LLP. He focuses his practice on commercial construction litigation and insurance recovery disputes, and he also has experience with both transactional and general business matters. Ryan can be reached by phone at 503-205-2394 or by email at ryan.hall@millernash.com.

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