In one such case that just came to light, 84 Lumber, the contractor that hired 84, and the subcontractor that 84 in turn hired were ordered to pay $1.3 million in wages and $200,000 in fines regarding work on a dormitory in the University of California system. The three companies are alleged to have intentionally underpaid workers. The sub also was found to have falsified records and failed to pay overtime and misclassified workers by classifying them in lower-paying jobs rather than the skilled, higher-rate positions that they actually worked.
One quote from the news release struck home: "Prime contractors cannot plead ignorance when their subcontractors fail to follow California's labor law," declared John Duncan, director of the state Labor Commissioner's Industrial Relations Department.
"Prime contractors cannot plead ignorance" is the phrase that nailed it for me. As a lumber and building material dealer engaged in offering installation services to your customers, you are in fact a general contractor and, as such, are subject to all of the additional rules and regulations governing that business. It isn't enough that you must comply with DOT rules and regulations for interstate and intrastate commerce, standard IRS issues for your workers, Workers Comp insurance, liability insurance, OSHA compliance and any number of other alphabet-labeled organizations. Now you must also comply with similar rules in the construction business.
This is a major reason why I have proselytized for years on the importance of a good, well-qualified installed sales manager. In addition, you need someone who is primarily responsible for risk management. This can be an employee if you have a likely candidate on staff, but if not, you may need to seek an outside resource.
By the way: Risk management is far more than just monitoring insurance issues. You need someone who is well-versed in tracking the various pieces of legislation that pass through the state government, can interpret U.S. government legislation, and will watch over your businesses' compliance with all of the above. In most cases, this may become a full-time job for one very important person.
Remember the phrase from above–"cannot plead ignorance." Someone in your organization must stay on top of these issues. If you don't have room for that position, turn to your federated lumber association for help. Review with it the specific issues that can and will have an impact on your business. You won't be sorry you made the call and you'll never have to worry about pleading ignorance again.
I don't know if being a member of a lumber association would have saved 84 Lumber from the issue outlined above, but at the very least it would have been more aware of the potential liability.
Get your business in line, connect with organizations who are dedicated to preserving your business and maybe someday you'll actually get to enjoy selling sticks again.