Editor’s Note: While this material was presented with Ohio contractors in mind, Baron said the CSPA and HSSA guidelines are similar or the same in other states. Review your states laws prior to acting on material published here.
It’s critical for landscape contractors to know consumer laws if they perform residential jobs. Dan Baron, an attorney at Baron Law in Cleveland, presented on this topic during an Ohio Landscape Association meeting last month.
“(If you do residential work), you must know consumer laws – that is if you do in-home sales consultation, these laws apply to you,” he said. “A lot of contractors don’t realize these laws exist until they get sued.”
According to Ohio Revised Code, if a contractor commits a deceptive act or practice, the homeowner may rescind the transaction or recover up to three times the amount of his actual damages or $200, whichever is greater. Baron said there are expensive consequences to violating consumer laws, such as the Consumer Sales Practices Act or the Home Solicitation Sales Act, which are detailed more below.
To explain the consequences, Baron gave this hypothetical example: A landscape contractor, bids a home construction project for Mr. Homeowner for $250,000. Mr. Homeowner accepts the job, signs a standard written contract and makes a deposit with the contractor, who begins work on Aug. 1, 2017. From there, all payments are made on time, all work is completed on time and the job is perfectly performed by the contractor by Feb. 1, 2018.
Yet that same day work is completed, Mr. Homeowner mails this letter to the contractor. “Dear landscape contractor – We love the work you did. It is perfect, everything we wanted! This serves as our notice to you that we are cancelling the contract for your construction work on our home. Please return all monies paid to you ($250,000) within 10 days. Love, Mr. Homeowner. P.S. – Seriously, we loved the work you did, but we want all the money back.”
Baron said this homeowner knew consumer laws and that if the contractor refused to refund, the homeowner could easily sue and win. So, the contractor refuses to refund, and Mr. Homeowner sues the landscaping company and its owner individually in common pleas court seeking $750,000 in damages, an additional $250,000 in punitive damages and $30,000 in attorney fees. Who wins? According to Baron, Mr. Homeowner wins, and the company and its owner are each responsible to pay $1,030,000.
“If there’s damages involved (with a residential customer like with this hypothetical situation), a dispute with them could cost three times as much as it could have if you followed simple steps,” Baron said.
“If you do residential work, you must know consumer laws – that is if you do in-home sales consultation, these laws apply to you. A lot of contractors don’t realize these laws exist until they get sued.” – Dan Baron, attorney, Baron Law
Types of consumer law.
Baron said consumer law applies for any sale made at a homeowner’s residence, and there are two types for contractors to consider.
First, the Home Solicitation Sales Act (HSSA) applies to all home solicitations costing more than $24. The only exception is if business-to-business (or commercial) sales. The punishment for violations under this act are both criminal and civil.
Second, the Consumer Sales Practices Act (CSPA) applies to all consumer transactions. The punishment for violations include very large damages up to three times the initial cost of a job.
Common HSSA violations.
Baron listed a few violations he sees landscape contractors make with regard to HSSA consumer laws:
- Right to cancel: According to consumer laws, contractors must provide homeowners with a “right to cancel” notice – and this needs to be given to them twice. This form gives the homeowner three days to cancel a contract or scope of work. Baron suggested giving homeowners a detachable form, so the homeowner has one copy and the contractor keeps the other copy.
“This is the No. 1 item I see left out of landscapers’ contracts with homeowners,” he said. “It might seem slightly impractical to give that stuff to homeowners, but homeowners do have that three-day right to cancel.” He added consequences when contractors neglect to do this can be serious – if a homeowner takes this to court, he may rescind the transaction and recover from the contractor up to three times the amount of actual damages.
- Right to cure: Including this in contracts protects contractors against receiving three-times in damages. So, if a homeowner notices any defects from a contractor job within 60 days of the completed work, the homeowner must request that defects are cured before filing a lawsuit. This gives contractors 30 days after notification of right to cure to fix any defects. “With this in the contract, the homeowner must give you an opportunity to fix their property and it gives you a chance to negotiate before they take this to court,” Baron said.
Common CSPA violations.
Baron listed a few violations he sees landscape contractors make with regard to CSPA consumer law:
- Contracts: Baron recommended all contractors make written (not oral) contracts when doing residential work.
- Deposits and receipts: Contractors must provide homeowners with a receipt that clearly states a description of goods and services. “I don’t like paperwork, either, but you need to give a receipt,” he said. In the contract, include language that indicates whether the deposit is refundable to the homeowner.
- Estimates: When performing an “in-home sale,” one law states that homeowners are entitled to an estimate. Baron advised that upon first face-to-face consultation with a homeowner, contractors should have the customer sign a form that states: You have the right to an estimate if the expected cost of repairs or services will be more than $25. Circle or initial by your choice: Written estimate, oral estimate, no estimate.”
“This might look foreign, but most of you have initialed or signed a document like this,” Baron said. “It’s the same statement you sign if you get your car fixed at the shop. But contractors must follow this same law to be protected, so provide homeowners this during the first face-to-face consultation.”
- Cost breakdown: To prevent a lawsuit or confusion on the part of the homeowner, provide them with a breakdown of material and labor costs. Baron recommended this be a fairly comprehensive document with exact details on every single cost in the job from labor to specific materials used. “I see a lot of smaller companies do their estimates where it will say, ‘the job costs $8,000 total, and the labor costs $5,000 out of that and materials are $3,000,’” he said. “That’s not itemized, and attorneys love to sue over that.” Subcontractor: Contractors need to let the homeowner know if a subcontractor will be performing work on the job. This information must be included in a written contract.
H-2B selection process completed
Due to an influx of applications, the visas were selected via a randomized lottery. By Lauren Rathmell
The U.S. Citizenship and Immigration Services (USCIS) announced the completion of the randomized lottery style selection of H-2B visas for the second half of the 2018 fiscal year. Rejected petitioners will receive a refund of associated filing fees.
The first half of the cap was met in December, nearly a month earlier than the previous year, leaving an influx of applications submitted for the second half of the year. The USCIS received requests for approximately 47,000 workers in five business days, exceeding the cap. To expedite the selection process, USCIS announced they would use a randomized lottery process to issue the visas.
According to the National Association of Landscape Professionals, more than 60 percent of seasonal businesses were unsuccessful in getting their H-2B workers.
“We're disappointed with how things are progressing thus far,” said Paul Mendelsohn, vice president of government relations for NALP. “But we're still confident that there's time for Congress to recognize the importance of taking action and doing so before any economic peril that is possible becomes a reality.”
Mendelsohn says the association is focusing on lobbying for the inclusion of language in the budget bill that includes cap relief. The bill has a deadline of March 23.
“We've been encouraging members to contact their members of Congress as we always do, but we've asked them to describe the ramifications that can be expected if they don't get their workers,” he said.
Ruppert acquires classic landscaping
Laytonsville, MD – Ruppert Landscape acquired Classic Landscaping, a grounds management company headquartered in Frederick, Maryland with a second location in Camp Hill, Pennsylvania. Classic made about $5 million in annual revenue.
The transaction includes the purchase of both Classic facilities, all commercial landscape management contracts, vehicles and equipment, and the hiring of more than 50 employees. Ruppert relocated its Frederick team from its rented facility to join Classic’s team facility. Classic’s Camp Hill branch will join Ruppert’s two existing Pennsylvania landscape management operations located in Toughkenamon and King of Prussia.
“Ruppert is committed to retaining Classic’s entire team and all of their commercial landscape maintenance contracts,” said Tom Barry, president of Ruppert’s landscape management division. “This acquisition allows us to strengthen our Frederick team to better serve our customers and expand our service coverage in Pennsylvania.”
Classic Landscaping has been doing business in central Maryland since 1979 and was founded by Scott Hall. When Hall passed away a little over a year ago, his widow, Sandie, continued to manage the business with the support of friends and family.
“As we contemplated the future of the business and began looking for a buyer, we focused on three objectives: we wanted to find a company whose vision and values were in line with my husband’s; a place where our people would want to continue working and which would provide them with new opportunities and challenges; and leaders who saw the value that I see in our talented team and our company that we’ve worked so hard to build over the last 40 years,” Sandie Hall said.
Ruppert Landscape provides commercial landscape construction and management with 23 branches and placed 9th on Lawn & Landscape’s Top 100 list in 2017.
Ask the Experts: Lower workers’ compensation ratings
A low experience rating can prevent some of the headaches that come with workers’ comp.
Q: I am struggling a bit with my workers’ compensation insurance. How can I lower my experience rating?
A: Without getting into detail about the formula or governing insurance bodies, here are some key items to focus on in order to lower your rating no matter your jurisdiction.
1. Limit the frequency of claims: Your rating will typically see more of a negative impact with multiple claims (frequency) as opposed to one large loss (severity). Frequency drives the probability for more claims to occur in the future which would make your company a higher risk to insure. Analyze your work-related injuries and near misses to search for trends that will help to prevent similar claims from occurring.
2. Institute a return-to-work program: All claims may potentially impact the experience rating in one way or another with frequency having a large role in the mathematical formula. Another key part of managing claim costs is the focus on reducing indemnity expenses on every claim. When the employee returns to work you eliminate any claim cost that would have been allocated to temporary disability. The savings you will see on your experience MOD is remarkable. If you need help creating a return-to-work program, reach out to your workers’ compensation insurance carrier for guidance. If you decide to implement any of these strategies going forward, implement a mandatory return-to-work program.
Here is an example of the financial impact of an employee returning to work quickly (even on modified duties). An injured employee will earn $400 a week on temporary disability and is estimated to need three months of recovery. Said claim closes three months later with a total incurred claim cost of $4,800 Indemnity (wages) and $2,000 in medical expenses, equaling $6,800.
However, if the injured employee returns to work quickly on modified duty, they earn no temporary disability. The claim closes for $2,000. Not only will the claim have less of an effect on your experience MOD but you will also have constant communication with injured employee, which keeps them feeling a part of the team, boost their morale and perhaps expedite the length of the injury.
3. Create a safety recognition program: Safety recognition programs identify employees who have successfully executed your company’s standard safety requirements or have gone above and beyond to better the company’s safety culture. Incentives such as handing out raffle tickets to employees who have executed standard safety protocol or having a monthly drawing for prizes will help keep the focus on safety and reduce accidents and costs.
Drew Garcia, Rancho Mesa Insurance Services, NALP Safety Committee
Explore the April 2018 Issue
Check out more from this issue and find you next story to read.