THE COTNEY BRIEF | Construction Law Simplified April 2026

Ohio’s New E-Verify Law Raises Compliance Stakes

Ohio has enacted a new E-Verify requirement aimed at the nonresidential construction industry. House Bill 246, known as the E-Verify Workforce Integrity Act, was signed on December 19, 2025, and took effect on March 20, 2026.

The law does not apply to all Ohio employers. Instead, it covers nonresidential construction contractors, subcontractors at any tier, and labor brokers that hire employees for covered nonresidential construction projects. The definition of covered work is broad and includes buildings, highways, bridges, utilities, and similar infrastructure, while excluding residential construction.

For covered employers, the main requirement is that each new employee hired for covered work must be run through E-Verify unless a limited exception applies. Employers must also retain verification records for three years from hire or one year after termination, whichever is later. If an employee receives a final nonconfirmation, the employer must terminate employment.

The law includes real enforcement teeth. Violations can lead to monetary penalties, disqualification from public contracting, and in some cases license consequences for knowingly employing unauthorized workers. Public contracts for covered state projects must also include compliance language.

👉 Takeaway: Contractors, subcontractors, and labor providers performing nonresidential construction work in Ohio should review hiring procedures, confirm E-Verify compliance, update record-retention practices, and make sure subcontract documents push these obligations down the chain.

Federal Circuit Reinforces Duty to Inquire

Korte Construction Co. v. Secretary of the Army
U.S. Court of Appeals for the Federal Circuit | April 9, 2026

Facts
Korte Construction was awarded an approximately $72.8 million design-build contract for a fuel systems maintenance hangar at Tinker Air Force Base. The dispute centered on whether the solicitation required Korte to install certain chilled water improvements, including piping to the slab edge and related connection points for future work. Korte argued that the contract documents did not require that work because the drawings lacked enough detail and did not clearly define the relevant chilled water references. The Army took the opposite position, treated the work as included, and later sought a refund of roughly $493,000 to $494,000 after the work was deleted from the contract. 

Issues
The main issue was whether the solicitation, read as a whole, required Korte to perform the chilled water work. A related issue was whether any inconsistency between the specifications and drawings created a patent ambiguity, which would trigger the contractor’s duty to ask questions before bidding rather than rely on its own reading after award. 

Holding
The Federal Circuit affirmed the Armed Services Board and held that the contract required the chilled water improvements. The court found that the specifications and drawings, read together, unambiguously called for that work. The court also held that Korte’s interpretation was not reasonable and that, even under Korte’s reading, the solicitation at minimum presented a patent ambiguity that required pre-bid inquiry. Because Korte did not raise that issue before award, it could not recover on that theory later. 

👉 Takeaway: This case is a strong reminder that contractors must read solicitations as an integrated whole, not as isolated specifications or drawings. When plans appear inconsistent, incomplete, or unclear, the safer course is to raise the issue before bid rather than assume a narrow interpretation and fight about scope later. For federal contractors in particular, patent ambiguity remains a serious trap: if the inconsistency is obvious enough that a reasonable bidder should notice it, failing to inquire can eliminate a later claim. 

Temporary Dry-In and Water Intrusion

Context: Water intrusion during construction is one of the most common and expensive sources of dispute in roofing, envelope, and renovation work, particularly when the contractor must open an existing building before the new system is fully installed. The problem is that many contracts either say very little about temporary dry-in obligations or impose language so broad that it effectively makes the contractor responsible for any leak that occurs during the course of the work, regardless of sequencing, weather, occupancy, preexisting conditions, or the conduct of others. A well-drafted provision should avoid that trap by making clear that the contractor is required to use reasonable temporary protection measures consistent with the stage of the work and the conditions on site, but is not acting as an insurer of the building against all water intrusion under every circumstance. It should also address related issues such as hidden conditions, owner-directed phasing, force majeure weather, adjacent systems outside the contractor’s scope, and the owner’s obligation to mitigate interior damage once a problem is identified.

Sample Provision:
Contractor shall take commercially reasonable measures to provide temporary dry-in and protect only those portions of the Work directly opened or disturbed by Contractor during performance of its scope. Contractor’s obligation is limited to the exercise of reasonable care under the circumstances then existing, taking into account the stage of construction, weather conditions, available access, project sequencing, occupancy constraints, and the condition of the existing structure. Contractor does not guarantee or warrant that the Project, the building envelope, or any portion of the premises will remain watertight or free from water intrusion during the course of construction.

Contractor shall be liable only for direct physical damage to the extent caused solely by Contractor’s proven failure to exercise reasonable care in implementing temporary protection within its scope of Work. Contractor shall have no responsibility for, and expressly disclaims responsibility for, any water intrusion, leaks, moisture migration, mold, mildew, corrosion, deterioration, loss of use, business interruption, damage to contents, or other consequential or indirect damages arising from or related to preexisting conditions, concealed conditions, defective design, defective specifications, owner-directed sequencing, phased construction, occupied conditions, restricted access, unusual or severe weather, force majeure events, failure of adjacent or existing systems, or the acts or omissions of Owner, other contractors, tenants, occupants, or third parties.

Owner acknowledges that temporary dry-in during construction is not equivalent to final watertight performance and accepts the risk of loss for the existing structure, interior finishes, contents, equipment, inventory, and operations except to the limited extent of Contractor’s sole negligence as expressly stated herein. Owner shall be responsible for protecting or relocating furniture, equipment, inventory, and other interior contents in areas affected by the Work. Contractor shall have no responsibility for damage to such items unless caused solely by Contractor’s gross negligence or willful misconduct.

If Contractor encounters conditions requiring emergency protection, temporary repairs, additional covering, after-hours response, or other measures due to weather events, concealed conditions, existing system failure, owner demands, occupancy requirements, or causes beyond Contractor’s control, such work shall be deemed extra work and Contractor shall be entitled to an equitable adjustment in the Contract Sum and Contract Time. No claim relating to water intrusion or temporary dry-in shall be asserted against Contractor unless Owner provides prompt written notice and a reasonable opportunity to inspect and mitigate before permanent corrective work is performed.

Construction is not facing a uniform collapse in demand. The more accurate problem is uneven economic momentum. Certain segments, especially data centers and power, continue to attract strong investment, while broader contractor sentiment has weakened because of recession concerns, policy uncertainty, and cost pressure. In AGC’s 2026 outlook, contractors reported noticeably dampened expectations compared with the prior year, driven in part by concern over the broader economy and the possibility of a downturn. That matters because construction is highly sensitive to shifts in confidence long before a project is formally cancelled. Owners delay starts, lenders tighten terms, and procurement decisions become more conservative even when backlogs still look respectable on paper. 

The current spending data supports that mixed picture. The U.S. Census Bureau reported that total construction spending in January 2026 reached a seasonally adjusted annual rate of $2.1904 trillion, which was 1.0 percent above January 2025, but 0.3 percent below the revised December 2025 figure. Private construction fell 0.6 percent from the prior month, with both residential and nonresidential categories declining, while public construction rose 0.6 percent. That does not signal a broad contraction by itself, but it does show loss of momentum in the private market at a time when many contractors already face labor constraints, tariff exposure, and tighter financing conditions. 

Interest rates and macroeconomic uncertainty continue to amplify that pressure. The Federal Reserve stated on March 18, 2026 that uncertainty about the economic outlook remains elevated, and its meeting materials show rates still high enough to influence capital planning and project timing. For construction, that translates into fewer speculative developments, more aggressive value engineering, and greater owner scrutiny of contingencies, allowances, and long lead commitments. In other words, economic uncertainty does not just reduce opportunity. It changes behavior inside the contract itself. 

The legal significance of this environment is substantial. When confidence softens, disputes usually rise before work disappears. Owners look harder at termination rights, notice failures, and strict compliance with schedule provisions. Contractors face more pushback on change orders, delay claims, escalation requests, and pay applications. Margins narrow, and parties become less willing to absorb risk informally. A clause that seemed harmless in a strong market can become dangerous in a slower one. Broad indemnity language, fixed-price commitments without escalation relief, pay-when-paid ambiguity, and termination-for-convenience provisions become much more consequential when financing weakens or a project loses momentum. Economic softness also increases the odds of defaults down the chain, which means contractors need stronger protections for security, suspension, and collection. 

👉 Takeaway: Contractors should treat this period as a contract discipline moment. Review price escalation language, clarify tariff and procurement risk, tighten notice and claim procedures, preserve suspension and termination rights, and confirm that payment, delay, and force majeure provisions match present market conditions. In a softening economy, the legal risk is rarely just lack of work. The greater risk is performing work under contract terms that assume a healthier market than the one that actually exists.

• NRCA Roofing Day in DC, April 14-15, 2026
• ERA (EPDM) Meetings, April 20-21, 2026
• FRSA Board and Committee Meetings, Clearwater, FL, April 22-24, 2026
• Roofing Alliance Meetings, Jekyll Island, GA, April 29-May 1, 2026

Disclaimer: This newsletter is for educational purposes only and does not constitute legal advice or create an attorney-client relationship.