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Hard Lessons From the Hard Rock Hotel Collapse

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We don’t know why New Orleans’s Hard Rock Hotel collapsed last Saturday. We do know that the collapse of the half-completed building killed two people and injured 30, with one more still missing.

We also know that in the normal course of events, well-run construction sites don’t suddenly crash to the ground.

The Hard Rock disaster illustrates the Wild West that too many construction sites have become over the past decades. It makes clear the magnitude of the changes needed to keep construction workers and surrounding communities safe.

When things go wrong for workers on construction sites, here’s what too often happens: The developer disclaims responsibility, pointing a finger at the general contractor, who in turn points to a subcontractor, and on and on, until finally there’s someone relatively powerless (and cashless) at the bottom of the totem pole who will ultimately be blamed.

In this instance, Hard Rock International issued a statement expressing its sympathies and stating that it had no involvement in the construction of the project, naming the developer, Kailas Companies, and the general contractor, Citadel Builders LLC. The developer pledged to work with law enforcement and the general contractor to find out what happened; it also offered prayers and sympathies for the victims. Local newspapers reported that the site had 50 different subcontractors and vendors. Notably, Local 130 of the International Brotherhood of Electrical Workers protested and leafletted at the job site last month, alleging that electrical workers onsite lacked licensing and training, and were mischaracterized as independent contractors.

Eventually, the facts will emerge about what caused the collapse. But this site was typical of today’s construction industry, which itself exemplifies what Obama labor official David Weil has called the “fissured workplace”: Companies avoid employer obligations by subcontracting, franchising, using temp agencies, or treating their workers as independent contractors. Fissuring results in degraded labor conditions: Each layer has to take a cut, leaving less money for the actual work; also, moving down the chain, one often finds scofflaw companies and contractors who cut corners.

Developers are generally off the hook legally if workers on construction sites are mistreated or harmed. Accordingly, they often have little or insufficient incentive to monitor the subcontractors’ compliance with employment laws and safety regulations on job sites, which can lead to serious abuses. General contractors are often similarly lax, although they can be found liable under OSHA regulations and sometimes other laws. An ongoing case in Minnesota involves a labor broker accused of human trafficking; the developer denied knowledge of the allegations and blamed a subcontractor for hiring that broker. Yet a few weeks ago, the alleged trafficker was again working for the same developer, who—in a Groundhog Day move—again denied knowledge and blamed a subcontractor.

Construction is one of the most dangerous industries, accounting for more than 20 percent of the 4,674 private-sector worker fatalities in 2017. Wage theft and payroll fraud are also common in construction, from California to Colorado to Washington, D.C. Companies commit payroll fraud by paying workers “off the books”; this saves them money and results in underpayments for workers, unfair competition for law-abiding businesses, and underfunding of public treasuries and worker compensation funds.

Fissured construction sites can also pose a more direct threat to the public. Dangerous worksites can create serious risk for pedestrians, drivers, and people nearby, as a harrowing 32-second video of the Hard Rock collapse demonstrates.

What can we do? For one thing, our labor laws need a serious overhaul to make it easier to join unions. Unionized workers are more likely to voice concerns about safety conditions, and unionized construction sites have fewer safety violations. A spate of recent polls shows public support for unions at record highs, and a recent MIT survey found that over half of workers would join a union if given the chance. (The current private-sector unionization rate is 6.4 percent.)

We also need stronger enforcement of safety standards. This requires beefing up the Occupational Safety and Health Administration (OSHA), which under the Trump administration has cut safety inspectors to the lowest level in the agency’s history. It also requires state and local prosecutors to prosecute employer crimes against workers. In a positive development on this front, nine attorney general offices now have dedicated workers’ rights bureaus, and a growing number of district attorneys have begun to prosecute crimes against workers.

We also need to make sure that companies can’t contract away their obligation to ensure lawful workplaces. Our laws too often let developers and general contractors off the hook. OSHA creates liability for construction general contractors, but not developers; most other workplace laws don’t even go that far. The companies at the top of the chain have ultimate control of a construction project and the power to ensure compliance: They hire the subcontractors, write the contracts, and hold the purse strings. Yet they’re usually uninvolved in actively ensuring compliance on their jobsites. But in recent years, promising legislation has passed at the state and local level in a few jurisdictions. Washington, D.C.’s wage theft statute, for example, creates joint and several liability for the general contractor and subcontractor.

At this point, we don’t know yet what caused New Orleans’s Hard Rock Hotel to collapse. We do know that, while it was a singular event, the diffusion of responsibility is representative of so much that goes on in construction sites and in many workplaces today. A building collapsed in New Orleans. What might be happening at a construction site near you?

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Thanks !

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