Cotney Blogs

Cotney Brief June 2025

THE COTNEY BRIEF | Construction Law Simplified

Issue 2 · June 2025     | (866) 303-5868 · tcotney@trentcotney.com

 

State and Federal Regulatory Changes

  • DOL hits pause on the 2024 Independent-Contractor Rule.

As of May 1, 2025, the U.S. Department of Labor has told its investigators to stop using the Biden “totality-of-the-circumstances” test to decide who counts as an independent contractor. This change was announced in Field Assistance Bulletin 2025-1. For now, while the rule is being challenged in court and reconsidered, the government will go back to the old test known as the “economic realities” test. That test looks at things like how much control the worker has over their job, whether they have a chance to make a profit or loss, and whether they’ve invested in their own tools and equipment.

The 2024 rule still applies in existing private lawsuits, but for federal enforcement, it’s on pause.

What should construction companies do now?
• Review and update any independent contractor agreements to reflect the older “economic realities” factors.
• Take a close look at any trade partners or subcontractors who provide labor and tools but no real investment.
• Make sure you have clear documentation showing how much freedom your independent contractors have to make money, take on other jobs, and invest in their own businesses.

👉Takeaway: You must treat contractor classifications as an open compliance issue and prepare your paperwork now, because the rules may shift again soon.

  • Major Tax Bill Moves to Senate — Key Wins for Contractors

On May 22, the U.S. House of Representatives passed H.R. 1, a major economic package combining tax changes, infrastructure funding, and construction incentives. The bill is now in the Senate. While the final version could still change, here’s what contractors need to know from the House-approved version:

  • 23% permanent deduction for pass-throughs — Boosts the current 20% tax break (Section 199A) for qualified business income.
    • Full write-off for equipment and vehicles — 100% immediate expensing for construction tools, machinery, work trucks, drones, and qualifying non-residential property through 2030.
    • Interest deduction relief — Brings back the more generous rule that limits business interest deductions based on EBITDA (earnings before interest, taxes, depreciation, and amortization) from 2025 to 2028.
    • New round of Opportunity Zones (2027 to 2033) — Offers a 30% basis increase for projects in designated rural areas, potentially reducing capital gains taxes.
    • $12.5 billion for FAA upgrades — Alongside new funding for wall and port-of-entry construction, the bill signals new federally funded civil and vertical projects.
    • Repeal of methane fees and rollback of clean-energy tax rules — Cuts compliance costs for energy-intensive contractors, including those doing asphalt, hot-mop, or industrial roofing work.

If passed by the Senate, this bill would offer substantial tax savings and project opportunities for construction firms.

👉 Takeaway: Contractors should plan ahead. Now is the time to prepare for equipment purchases, adjust tax strategies, and explore rural Opportunity Zone projects while the bill advances.

  • Florida HB 715 reshapes post-storm roofing contracts.
    Effective Date: May 19, 2025
    Governor DeSantis signed HB 715 into law, and it’s now in effect statewide

What’s Changed

  1. Roof-to-wall evaluation & reinforcement allowed
    Licensed roofing contractors can now inspect and strengthen roof-to-wall connections on wood structures but only when reroofing or repairing is part of the same job.
  2. 10-day cancellation window narrowed
    Homeowners can cancel a roofing contract within 10 days or before the start date whichever is sooner, but only if the contract was signed within 180 days of a state of emergency declaration and the home is inside the declared area.
  3. Mandatory bold insurance notice
    Contracts for reroofs or repairs must now include a bold, at least 14‑point font notice telling homeowners to confirm their insurance coverage, deductible, and policy terms before signing.

What Contractors Should Do Now

  • Update your proposal templates and contracts to include the new language, requirements, and cancellation conditions.
  • Train your sales team to explain when the 10-day rescission applies and to prompt homeowners to verify their insurance.
  • Include roof-to-wall checks in your standard protocols when doing any reroof or repair work.

👉 Takeaway: HB 715 requires updated contracts, clear insurance advisories, and possible added roof-to-wall work, so update your forms and bolster your team’s training now to stay compliant and steer clear of complaints.

  • 90-day tariff truce with China re-prices steel and solar imports.
    On May 12, 2025, a new executive order temporarily cut the U.S.–China reciprocal tariff on certain imports from 34% down to 10% under a 90‑day truce that runs through August 12, 2025.

What Changed—and What Didn’t

  • Tariff drop: Reciprocal tariffs are now 10 percent instead of 34% or 145% (which included extra levies).
  • Existing tariffs remain:
    • Section 232 steel and aluminum tariffs are still 25%.
    • Fentanyl-related IEEPA surcharge remains 20%.
  • Total cost: Roofing materials from China remain burdened by roughly 40–55% in duties.

What This Means for Contractors

  • Bids today should…
    • Include a tariff‑adjustment clause tied to the 90‑day review (see Cotney Brief 01.01).
    • Prepare for customs delays or a sudden return to 34 percent+ duty if talks stall after August 12.
  • Plan purchases carefully: Buy now to benefit from lower duties just in case they rise again this fall.

 

👉 Takeaway: Take advantage of lower Chinese import tariffs while they last, but protect yourself with tariff clauses in bids and prepare for a possible rate jump after August 12.

Case Law Update

U.S. Trinity Energy Services, L.L.C. v. Southeast Directional Drilling, L.L.C., No. 24-10833 (5th Cir. Apr 28 2025)
A Texas pipeline prime contractor, Trinity Energy, sought to vacate a $1.66 million arbitration award that compensated its horizontal-directional-drilling subcontractor for COVID-era and permit-related stand-by delays. Trinity argued the arbitrators “manifestly disregarded” Texas contract law by refusing to read a no-damage-for-delay clause as a bar to stand-by costs, and therefore exceeded their powers under FAA § 10(a)(4). The district court confirmed the award and Trinity appealed.

The Fifth Circuit affirmed and flatly rejected “manifest disregard of the law” as a freestanding ground for vacating the decision, reiterating that the exclusive FAA § 10 grounds cannot be judicially expanded. The Fifth now aligns with the Eighth and Eleventh Circuits in rejecting manifest-disregard, while the Second, Fourth, Sixth, Seventh and Ninth still treat it as viable; the First and Tenth have not ruled definitively. This deepening split makes Supreme Court review plausible.

👉 Takeaway: If you do business in Texas, Louisiana, or Mississippi, expect that a losing arbitration award will be extremely hard to undo. Build protection into your contracts by (1) requiring the arbitrators to issue a detailed, “reasoned” decision, (2) adding an internal appeal option within the arbitration rules, and (3) making any legal objections part of the hearing record.

Reducing the Risk of ICE Stops for Construction Crews

The guidance below provides compliance‑oriented, rights‑focused measures aimed at reducing the likelihood of pretextual traffic stops and ensuring workers are prepared if U.S. Immigration and Customs Enforcement (ICE) officers make contact. This is general information, not legal advice.

Tighten your company’s compliance “paper trail” by (1) running periodic in-house Form I-9 audits—correct errors, flag missing sections, and purge files beyond the three-year/one-year retention rule—to demonstrate good-faith compliance; (2) enrolling in E-Verify or DHS’s IMAGE program, which marks participants as low-risk and can defuse roadside checks; (3) keeping every vehicle 100 % road-legal with a weekly inspection checklist so traffic officers (and any ICE partners under 287(g)) have no reason to pull you over; (4) branding trucks with clear magnetic door signs showing the company name, DOT number, and phone, since unmarked or heavily tinted vehicles attract more scrutiny; and (5) stashing a laminated rights card in each glove box to give drivers a scripted response and counsel’s phone number if immigration or police questioning begins.

For more information on how to handle ICE stops of vehicles, please check my article on the topic here:

https://www.cotneycl.com/reducing-the-risk-of-ice-stops-for-construction-crews/

Contract Provision of the Month – Differing Site Conditions Clause

Context: Unexpected subsurface rock, buried debris, or hidden utility lines can derail production schedules and inflate costs overnight. A well-drafted Differing Site Conditions clause shifts that risk away from the contractor by guaranteeing a fair change order, both time and money, whenever site realities materially deviate from the bid documents or ordinary expectations.

Differing Site Conditions
If the Contractor encounters (a) subsurface or latent physical conditions at the site that differ materially from those indicated in the Contract Documents, or (b) unknown physical conditions of an unusual nature that differ materially from conditions ordinarily encountered and generally recognized as inherent in the Work, the Contractor shall, within forty-eight (48) hours of discovery, provide written notice to the Owner and Architect/Engineer before the conditions are disturbed. Upon verification, the Contractor shall be entitled to an equitable adjustment in the Contract Sum and Contract Time for all direct and indirect costs, delays, and impacts reasonably attributable to such conditions, including but not limited to standby, re-mobilization, redesign, and procurement of alternate means and methods. Failure to provide timely notice shall not bar recovery unless the Owner demonstrates actual prejudice caused by the delay.

For more information on differing site conditions, check out my articles on the subject here: https://www.cotneycl.com/the-differing-site-conditions-clause-part-1/

Upcoming Speaking Engagements & Events

  • Chicago Roofing Contractors Association Scholarship Dinner, June 18, 2025
  • Southeastern Insulation Contractors Association Conference, Amelia Island, Florida, Regulatory Changes Impacting the Industry, June 24, 2025
  • Stay-tuned for in-person book signings for the my new book Roofing Law: Contracts available on Amazon: https://www.amazon.com/Roofing-Law-Contracts-Trent-Cotney/dp/B0DR6V89B5/

 

 

Disclaimer: This newsletter is for informational purposes only and does not constitute legal advice.

 

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.