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Healthcare Mandate For Small Construction Firms

By Steven Tanner on January 20, 2010 9:45 AM

Scott Brown's Senate win in Massachusetts has cast confusion onto the prospects of the health care legislation we've been hearing about for months. One question that will likely remain is whether any eventual legislation will include a construction employer mandate.

It is widely known that the Senate version of the health care reform bill requires employers with 50 or more workers to provide them with coverage. But a lesser-known construction employer mandate in the bill would require construction companies with just five or more employees and a payroll of $250,000 to do the same (Denver Daily News).

The last-minute amendment by Senate Majority Leader Harry Reid, D-Nevada, has irked many small construction companies already hurting from the steep housing decline.

Roughly 53,000 jobs were axed last December in the construction industry alone, according to statistics from the Bureau of Labor Statistics (BLS). That's not insignificant, considering that a total of 85,000 non-farm jobs were lost during that period.

Many of these small businesses claim that the construction employer mandate would be just another punch in the gut as these companies struggle to survive. Non-compliance would result in an annual excise tax of up to 8 percent of payroll. The National Federation of Independent Business claims the mandate would devastate the industry (NFIB).

But construction is very different than other industries, claims Oregon Senator Jeff Merkley, who proposed the amendment (Article Blast).

Since 90 percent of construction firms employ less than 20 people and non-union firms have an unfair advantage over union construction companies that are contractually obligated to provide health care coverage, he argued, a construction employer mandate would only level the playing field. Construction workers also are more prone to injury in general.

Small construction companies are understandably angry about this, but the issue is much more complex than it may appear on the surface.

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