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May 2026 |  Issue 13

NLRB Restores Narrower Joint-Employer Standard: What Contractors Should Know

The National Labor Relations Board has formally withdrawn its 2023 joint-employer rule and restored the prior, narrower 2020 standard. This is a significant development for construction because contractors, subcontractors, staffing companies, labor brokers, and construction managers often work within layered employment relationships on the same project.

Under the restored standard, joint-employer status generally requires evidence that one entity exercises substantial direct and immediate control over essential employment terms of another employer’s workers. That is a more contractor-friendly approach than the broader 2023 rule, which would have increased risk where a contractor merely reserved authority or exercised indirect control over employment conditions.

 Takeaway: Construction employers should welcome the added certainty, but they should not treat the change as a license to blur employment lines on the jobsite. Prime contractors and construction managers may enforce contract requirements, safety obligations, project schedules, quality standards, and site rules. However, they should avoid directly supervising, disciplining, assigning, hiring, firing, or controlling the pay of another company’s employees. Field personnel should communicate through the subcontractor’s designated supervisor whenever possible and document that the subcontractor remains responsible for its own workforce.

Case Law Update

Florida Court Clarifies When an Invitation to Bid Does Not Create a Subcontractor Relationship

In Willis A. Smith Construction, Inc. v. Keathley, No. 2D2025-1900, the Florida Second District Court of Appeal addressed whether a general contractor could claim workers’ compensation immunity after a worker was injured while visiting a project site before submitting a subcontractor bid. The case arose from a University of South Florida restoration project. The general contractor argued that the injured worker’s employer had effectively been “sublet” part of the contractor’s work and that the contractor should receive statutory employer immunity under Florida’s workers’ compensation statute. The court disagreed.

The court held that the invitation to bid did not create a subcontract or pass any contractual obligation from the general contractor to the potential subcontractor. The invitation did not guarantee the work, did not specify a binding scope, did not provide consideration beyond the right to submit a bid, and did not state that the bidder’s proposal would become part of the contractor’s required price proposal. The court also emphasized that even a submitted bid does not create a contract unless the general contractor accepts it. Because the worker was injured while preparing a bid, and the company never submitted one, the court affirmed the denial of the contractor’s workers’ compensation immunity argument.

 Takeaway: This decision is a reminder that pre-bid communications, job walks, site visits, and invitations to bid do not automatically create subcontractor status or workers’ compensation immunity. General contractors should be careful when inviting potential subcontractors, vendors, or consultants onto a project site before a subcontract is awarded. If the contractor wants to control risk during pre-bid site visits, it should use clear site-access language, require proof of insurance where appropriate, document that no subcontract has been awarded, and confirm that each visitor remains responsible for its own employees. Contractors should not assume that workers’ compensation immunity applies merely because the injured person worked for a company that was considering bidding on the project.

Manufacturer System Compatibility Clause

Context: Contractors are often asked to install materials or systems that they did not select, design, manufacture, or test for compatibility with existing conditions. This is especially common on reroofing, restoration, building envelope, waterproofing, HVAC, electrical, and specialty trade projects where new products must interact with older substrates, adjacent assemblies, legacy materials, or owner-selected components. A manufacturer may warrant its own product, but that does not mean the full system will perform properly when combined with incompatible materials, undocumented prior work, trapped moisture, unusual site conditions, or products selected by others. A manufacturer system compatibility clause helps allocate that risk. It confirms that the contractor is responsible for proper installation within its scope, but not for failures caused by product incompatibility, design decisions, concealed conditions, manufacturer limitations, or owner-directed substitutions unless the contractor expressly accepts that responsibility in writing.

Sample Provision:

Contractor shall be responsible for installing the materials, products, components, and systems within Contractor’s scope of work in accordance with the Contract Documents and applicable manufacturer installation instructions made available to Contractor. Contractor does not warrant, guarantee, or assume responsibility for the compatibility, integration, performance, chemical interaction, physical compatibility, adhesion, fastening performance, thermal movement, moisture tolerance, structural suitability, code compliance, or long-term performance of any material, product, component, assembly, substrate, existing condition, adjacent system, or owner-selected item that Contractor did not design, manufacture, specify, select, or expressly approve in writing.

Owner acknowledges that the performance of the completed work may depend on factors outside Contractor’s control, including existing substrates, concealed conditions, prior repairs, undocumented assemblies, trapped moisture, residual contaminants, incompatible coatings, sealants, adhesives, membranes, insulation, fasteners, metals, treated lumber, vapor retarders, air barriers, waterproofing materials, mechanical penetrations, drainage conditions, building movement, environmental exposure, maintenance practices, and materials or systems furnished, specified, approved, or required by others.

If Contractor identifies a potential compatibility, integration, adhesion, substrate, moisture, fastening, manufacturer approval, warranty, or performance concern, Contractor may request written direction, additional investigation, testing, manufacturer review, design clarification, product substitution, or a change order before proceeding with the affected work. Any related delay, remobilization, testing, redesign, additional preparation, substitution, warranty coordination, manufacturer requirement, or change in means, methods, sequencing, labor, material, or equipment shall constitute a compensable change to the Contract Time and Contract Sum.

Contractor shall not be liable for loss, damage, defect, failure, delay, warranty denial, repair, replacement, consequential damage, or reduced service life arising out of or relating to incompatibility, interaction, integration failure, design deficiency, specification error, owner-selected materials, manufacturer limitations, existing or concealed conditions, adjacent work, prior work, substituted products, or materials furnished or directed by others, except to the extent caused by Contractor’s failure to install materials within its scope in accordance with the Contract Documents and applicable manufacturer installation instructions.

Contractors continue to operate in an environment where pricing certainty can disappear quickly. Material volatility, tariff changes, freight disruption, regulatory shifts, manufacturer delays, and labor constraints can all affect project cost and schedule after a contract is signed. That risk is especially significant in exterior envelope work, where projects often depend on products with metal, petroleum, insulation, membrane, or imported components.

The issue is not limited to whether material prices are generally rising. The more important legal question is who bears the risk when project costs change after the bid. Associated Builders and Contractors reported that construction input prices increased in early 2026, with non-residential construction input prices also higher year over year. ABC also attributed part of that pressure to tariff-affected materials. AGC has likewise warned contractors that tariffs and construction material price changes require careful contract planning, including attention to escalation and procurement terms.

For contractors, a fixed-price contract can become dangerous when the contract assumes a stable market that no longer exists. If the agreement does not include a price escalation clause, substitution right, or material availability protection, the contractor may be forced to absorb increased costs that were neither reasonably anticipated nor included in the bid. That problem becomes worse when the owner delays approval, a design professional rejects a reasonable substitution, a manufacturer extends lead times, or a public authority changes requirements after contract execution.

Contractors should focus on four areas. First, price escalation clauses should identify the affected materials, the triggering event, the proof required, and the method for adjusting the contract price. A good clause should cover tariffs, duties, taxes, freight surcharges, manufacturer increases, and extraordinary market changes. Second, procurement language should allow the contractor to order long-lead materials promptly and require timely owner approval of submittals. If the owner delays approval, the contractor should receive a time extension and price adjustment.

Third, contracts should include a change-in-law or regulatory-change provision. New laws, code interpretations, agency directives, or other governmental actions can increase cost or delay performance. The contractor should not bear those impacts when they occur after the contract date and were outside the contractor’s control. Fourth, substitution language should give the contractor a practical path to use comparable materials when specified products become unavailable or commercially unreasonable.

Documentation remains critical. Contractors should preserve supplier quotes and communications showing when pricing or availability changed. Without that record, even a strong contract clause may be difficult to enforce.

 Takeaway: Contractors should not rely on general force majeure language to protect them from material volatility. Force majeure may help with delay, but it often does not provide a price adjustment. Contractors should use targeted clauses addressing price escalation and regulatory change. In the current market, the party that controls the contract language often controls who absorbs the price increase.

Upcoming Speaking Engagements & Events

• Western States Board and Committee Meetings, Portland, OR, May 18 to May 21, 2026

• ABC of Central Florida, Safety Conference, Orlando, FL, May 28, 2026

• FRSA Expo, Orlando, FL, June 10 to June 12, 2026