THE COTNEY BRIEF | Construction Law Simplified March 2026

1. State and Federal Regulatory Changes

DOL Proposes Return to a Narrower Independent Contractor Test

The U.S. Department of Labor has proposed a significant change to the federal independent contractor test. On February 27, 2026, the Wage and Hour Division published a Notice of Proposed Rulemaking that would rescind the 2024 independent contractor rule and replace it with an approach modeled on the 2021 rule, with some modifications. The comment period runs through April 28, 2026. 

The proposal would return the analysis to a more streamlined “economic reality” test focused on whether a worker is truly in business for himself or herself, or instead is economically dependent on the employer. The Department identifies two “core factors” as especially important: the nature and degree of control over the work, and the worker’s opportunity for profit or loss based on initiative or investment. 

For contractors, this matters because classification decisions affect overtime exposure, minimum wage obligations, recordkeeping, and potential litigation risk under the Fair Labor Standards Act. The Department says the proposed rule is intended to create a clearer and more predictable framework than the 2024 rule, which it views as ambiguous and potentially too restrictive of legitimate independent contractor relationships. 

That said, this remains only a proposed rule. It does not change other legal standards that may apply under state law, tax law, or labor law, and employers must still comply with the test that provides the greatest worker protection where multiple standards apply. Roofing and construction employers that rely on subcontractors or 1099 relationships should use this moment to review current classification practices, contracts, and documentation before any final rule is adopted. 

👉 Takeaway: The proposed rule could make federal independent contractor analysis more predictable by refocusing on control and opportunity for profit or loss, but construction employers should not treat it as a free pass. Until a final rule is adopted, and because state and tax law standards still apply, contractors should continue to review subcontractor relationships, agreements, and supporting documentation carefully.

2. Immigration Compliance Package

Contractors are operating in an environment of increased scrutiny surrounding hiring practices, employment verification, and workforce documentation. To help employers strengthen internal compliance procedures, I have developed an Immigration Compliance Package for the construction industry. The package includes a Supervisor Rights Card, Employee Rights Cards in English and Spanish, an I-9 onboarding checklist, an I-9 record retention policy, and a written immigration compliance policy. These materials are designed to support consistent internal practices, improve documentation, and help employers manage day-to-day compliance obligations. For more information, please contact me at trent.cotney@arlaw.com.

3. Case Law Update

IEEPA Tariff Ruling in the Supreme Court

Facts: In Learning Resources, Inc. v. Trump and the consolidated V.O.S. Selections case, businesses and states challenged tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The administration argued that IEEPA’s authorization to “regulate . . . importation” allowed the President to impose broad tariffs in response to declared national emergencies. Lower courts rejected that position, and the issue reached the U.S. Supreme Court.

Holding: On February 20, 2026, the Supreme Court held that IEEPA does not authorize the President to impose tariffs. The Court concluded that tariff authority belongs to Congress under Article I and that IEEPA did not clearly delegate tariff power of that scope to the Executive Branch. The Court also rejected the government’s reading of the statute as too broad and effectively unbounded in scope, amount, and duration. 

👉 Takeaway: The decision places a significant limit on the use of emergency powers for trade policy. For contractors, suppliers, and import-dependent businesses, it is a reminder that tariff-related cost shocks may depend as much on statutory authority as on politics. The ruling does not eliminate all presidential tariff authority, however, because other trade statutes may still provide alternative pathways for future tariffs. 

4. Contract Provision of the Month

Electronic Communications and E-Signature Authorization

Context: Construction projects move quickly, and contract administration rarely happens in one neat stack of paper signed in person by everyone involved. Quotes, change directives, approvals, scheduling updates, and payment communications often occur by email, text, shared platform, or electronic signature software. The problem is that many contracts still do not clearly address whether those communications are binding. That gap can create disputes over whether a party actually approved a change, accepted a proposal, or authorized extra work. An electronic communications and e-signature clause helps eliminate that uncertainty by confirming that the parties may transact electronically and that electronically signed documents and approved digital communications carry the same force as traditional signed writings. It also helps reduce later arguments over authenticity, timing, and enforceability.

Sample Provision:
Electronic Communications and Electronic Signatures. The parties agree that this Agreement, any change orders, work authorizations, notices, approvals, invoices, waivers, and other Project-related communications or documents may be transmitted, executed, and stored electronically. Electronic signatures, including signatures affixed through recognized electronic signature platforms, and approvals transmitted by email or other agreed electronic means, shall be deemed valid and enforceable to the fullest extent permitted by applicable law and shall have the same force and effect as original handwritten signatures. The parties further agree that electronically stored copies of this Agreement and related Project documents shall be admissible for all purposes and may be relied upon as if they were original documents. Each party is responsible for maintaining accurate contact information for its authorized representatives and for safeguarding access to its electronic communication systems and signature tools. No party shall deny the validity or enforceability of a document solely because it was transmitted or executed electronically.

Many contractors rely on calls and text messages to generate leads, confirm appointments, follow up on estimates, and market financing or seasonal services. That creates real exposure under the Telephone Consumer Protection Act (TCPA) and related telemarketing rules. The TCPA restricts telemarketing calls and texts made with an automatic telephone dialing system or an artificial or prerecorded voice, and FCC rules require prior express written consent for telemarketing robocalls and robotexts to wireless numbers and residential lines in many circumstances. The consent must clearly authorize the seller to deliver telemarketing messages to the number provided, and it cannot be a condition of purchase. 

Contractors also need to pay attention to revocation. Under current FCC rules, a consumer may revoke consent in any reasonable manner, and the caller must honor that revocation within a reasonable time not to exceed ten business days. A business cannot force consumers to use only one opt-out method. In practice, that means a roofing, HVAC, solar, or restoration company that receives a “stop,” “unsubscribe,” or similar request needs a working internal process to suppress future marketing quickly. 

Separate Do Not Call rules also matter. The FTC’s Telemarketing Sales Rule applies to calls made to induce the purchase of goods or services and requires sellers and telemarketers to comply with National Do Not Call restrictions unless an exception applies. Purely informational calls are treated differently, but once the message encourages a sale, the rules become much stricter. 

👉 Takeaway: Contractors should not treat lead generation texts and outbound sales calls as informal business development. They should use clear written consent language, maintain opt-out procedures, scrub calling lists, and train employees on when a communication crosses the line into telemarketing. One sloppy text campaign can become a very expensive lesson in federal compliance. 

• NRCA Virtual LegalCon, State of the Industry, March 19, 2026
• Tampa Home Show, Tampa Convention Center, March 24, 2026
• Roofer’s Coffee Shop Podcast, Risk Mitigation, March 25, 2026
• NRCA Roofing Day in DC, April 14-15, 2026

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