Restrictive Covenants in Construction Contracts

By Maru Sue Greenleaf and Ryan Lorch, Berg Hill Greanleaf + Ruscitti

While the significant amount of new construction occurring throughout Colorado may be readily apparent, one harsh reality lurking behind the scenes has resulted in increasing frustration and headaches for contractors — labor shortages.

According to a recent article by Forbes, the construction industry workforce “skews heavily toward middle-aged people and there aren’t enough young people getting into the trades to eventually replace them,” and predicts that the “construction labor shortage is expected to amplify in the coming years.” The Associated General Contractors of America consistently reported that 70 percent of construction firms “report that they are having a hard time filling hourly craft positions that represent the bulk of the construction workforce.”

In Colorado specifically, recent studies show that Colorado has gained 45,000 blue-collar good jobs and 120,000 skilled-services good jobs for workers without BAs between 1991 and 2015. Of these non-BA jobs, the construction industry offers the most, with an estimated 68,000 throughout Colorado.

Although demand for construction continues to boom, these labor shortages and trends have resulted in hikes in the cost of labor, a decrease in the availability of skilled and competent workers and the resulting potential for legal impacts. As a result, one area of concern that construction professionals sometimes glance over, but ought to pay close attention to, is the prevalent use of nonsolicitation agreements in construction agreements in which companies agree not to solicit each other’s employees.

To read this story and other complete articles featured in the October 22, 2018 print edition of Law Week Colorado, copies are available for purchase online.