It's been a relatively quiet year for pro dealers in state legislatures. Nevertheless, some recent changes promise heartburn or relief, depending on where you live. Among the most notable developments:
Arizona Construction supply companies with operations in Arizona should prepare for turbulent times, and potentially tough penalties, following a new law that cracks down on the hiring of illegal immigrants and other undocumented workers. On July 9, Gov. Janet Napolitano (D) signed what she called "the most aggressive action in the country against companies who knowingly or intentionally hire undocumented workers."
The law requires employers to check the legal status of their employees through a federal database called the Basic Pilot Program. The first offense for "knowingly" employing an illegal immigrant can result in a 10-day business-license suspension, and an "intentional hire" of such a person may result in more than 10 days' suspension. After further offenses, employers can be placed on three years probation, forced to fire all illegal employees, and sign an affidavit promising they will not continue to hire illegals. If a business is caught again for the same offense while on probation, it will permanently lose its license.
The law will come into effect Jan. 1. Napolitano said she didn't want to signthe measure passed by the Republican-controlled legislature, but her hand was forced when Congress failed to act on immigration reform. She said she might call a special legislative session to fix what she sees as problems with the bill before it takes effect.
New York On July 16, dealers in New York state faced a drop-dead date for the sale of architectural and industrial maintenance (AIM) coatings, such as paints, stains, and sealers that contain volatile organic compounds (VOC), which could create air quality concerns such as respiratory problems.
An emergency rule was passed by the New York State Department of Environmental Conservation late last year. Although the decision was made after the coatings' selling season, it was enacted just as dealers had completed their purchases for spring 2007. The Northeastern Retail Lumber Association failed to get the deadline pushed back to Sept. 30 but did manage to negotiate for the dismissal of an earlier May 15 mandate.
The ruling affects about 95% of New York's dealers, including 400 yards and retail members, according to Aisha Tator, the association's director of legislative and regulatory affairs. An earlier ruling indefinitely allowed retailers to continue to sell their remaining stock of AIM coatings manufactured before Jan. 1, 2005, while other states in the Northeast passed regulations that permit retailers to sell the higher VOC-level products as late as January 2012. The emergency law covers about 52 products.
"We're still left with a very big problem of disposal and remediation of these products," Tator says. "Unlike Home Depot and Lowe's, our members do not have branches in other states. Our members don't have that luxury." Some of these newly unsellable products are being bought at auction for just $2 a can, Tator says.
New England On July 5, Rhode Island passed the Rhode Island Building Materials Dealers Association's "Construction Trust" legislation, which makes debt owed to dealers nondischargeable in bankruptcy proceedings. The move gives dealers more leverage when dealing with fraudulent contractors in cases where the contractor has been paid by a homeowner for the job and supplies purchased from a dealer, but does not in turn and pay the supplier. At press time, similar legislation was in committee in Vermont and Connecticut.
Under the Federal Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, suppliers were one of the last to get paid once a contractor filed for bankruptcy. Suppliers also found themselves getting paid pennies to the dollar when pursuing fraudulent contractors in court. "It's a costly process to even chase them. Dealers had to weigh if it was even worth pursuing legal action," Tator says.
One Rhode Island dealer, which the NRLA did not wish to disclose, lost out on $50,000 worth of materials after taking a bankrupt contractor to court. The same dealer also was paid 10 cents on the dollar for $30,000 worth of materials in a separate case.
"We are hoping this acts as a catalyst in other states. Once you set precedence, it's a lot easier to get it through other states," Tator says.
Washington The state's Department of Labor and Industries enacted a Heat-Related Illness in the Outdoor Environment emergency rule, effective June 18 through Oct. 3. The rule requires that employers with one or more employees working outdoors must establish and implement written procedures to prevent heat-related illness, including provisions for breaks.
Employers also must provide enough drinking water when heat-related hazards are present, so that each employee can drink at least one quart of water per hour. Additionally, a formalized procedure must be in place to respond to workers who succumb to heat-related illness, and prevention training must be provided to employees and supervisors.
According to Casey Voorhees, executive director of the Western Building Material Association, Washington tried to pass similar legislation last year. The new emergency plan was put into place without any hearings, despite opposition from the state's business community. The state is working on a permanent rule that should go into effect next year.
In another notable action, dealers will be responsible for collecting proper sales tax in each of the destination points they serve, which can be tricky when taking into account that each of the counties has a different rate. Effective July 1, 2008, the law is designed to counter sales from out of state that are not charging sales tax. The change will not impact wholesale sales.
"We don't know yet if some of the various computers can assign a tax rate based on a ZIP code, and we are not sure how dealers are going to handle this," Voorhees says.