Real Talk: Raising Costs 101

Real Talk: Raising Costs 101

Ongoing pandemic-related shortages mean labor and material costs are rising, and so is customer demand. Facing long finished products and raw materials delays, small to medium-sized manufacturers are being forced to adapt quickly. In fact, here’s a Reuters list of comments from U.S. companies describing their efforts to counter this inflationary environment. The good news? While manufacturers face intense cost pressure, many customers have been willing to accept higher prices. But regardless of the circumstances, communicating price increase is no easy task. While consumers understand the challenges industries are up against, it won’t make the idea of spending more money any more fun or appealing.

So as we head into 2022, what are the most effective ways to communicate price hikes without damaging your customer relationships – and is that even possible? We’re relaying tried and true research-backed methods released by Harvard Business Review to paint a clear picture of the message your customers need to hear.

Call the action what it is: a price increase.

Don’t label it a price adjustment, a price change, or other jargon. Rather than tiptoeing around the inevitable – be direct. Your current circumstance means your customer will need to pay more out of pocket. Decades of consumer psychology research has found that complicating bad news rarely pays off for companies. Customers know that brands are trying to influence their opinions and behavior and appreciate it when they use helpful, transparent, and informative communication methods. When a brand uses a code word to convey a price increase, it does not distract customers or dilute the negative impact of the news. It tends to make recipients more cautious and critical of the announcement.

Clearly explain the price increase.

The realities of inflation, widespread material and labor shortages, rising input costs, and the return to “normalcy” are on everyone’s mind. Under such circumstances, when customers learn that a brand’s price is increasing, it simply confirms what they’ve been expecting. Don’t overcomplicate your message, be straightforward and honest. Research shows that the perceived fairness of a price increase is the second-biggest driver of how customers react.

Link the price increase to a customer-centric value narrative.

When communicating a price increase, provide a value narrative — a compelling story for why the price is increasing that focuses on customer value. A value narrative can be effective even when the price increase is predominantly due to input cost increases. Communicate to customers that the brand can only continue to provide the current level of benefits if it raises the price. It’s powerful to let customers know that your company is committed to excellence and opting not to degrade the product’s quality. Remember: customers are more willing to accept a price increase if it’s accompanied by improvements to your product or service. Better quality fabric in the clothing you manufacture, or even new packaging for your product can help justify a price increase.

Is there a best time of year to raise prices?

That’s a tricky question, and the answer is there is no one size fits all date or time of year that will work for everyone. Whatever time of year you decide you need to make the change, ensuring that your customers have ample time to come to terms with the price increase is key. They may need to re-assess their budget or consider alternative options, so you should keep them in the loop with advance notice. It should also go without saying, but make sure everyone on your team is aware of the price adjustments and that you help your team navigate any questions they may have, too. Our Manufacturing Services Group works with businesses in diverse industries, from building materials to food processing, specialty sporting goods, commercial lighting, health, beauty, pharmaceuticals, and more. Whatever the size of your venture, we can help you meet your goals now and in the future. Contact our RBT team of professionals to review your specific manufacturing needs. Additionally, if you would like to submit feedback or topic ideas for future articles our team produces, please feel free to contact us at TLideas@rbtcpas.com.

Sources: HBR, Reuters

Why NY Manufacturers Struggle to Recruit Women & How to Fix it

Despite modern progress, women are still struggling to break through the manufacturing sector’s glass ceiling.

According to the U.S. Bureau of Labor Statistics, 47% of the entire workforce and 52% of all professionals and managers are women, yet they represent less than 30% of manufacturing workers. New York manufacturers have a lot of room for improvement when it comes to women in leadership positions. A 2020 women in manufacturing study found Pennsylvania, Colorado, and Connecticut to have the highest percentage of women in leadership positions. New York ranks 10th.

The reality is manufacturing job openings currently outnumber qualified job applicants. From technicians, and machinists, to programmers and assemblers, as well as marketing, sales, finance, and even cybersecurity professionals, manufacturers are hiring. But are you doing your part to stay competitive and attract top talent? Your team needs to determine:

  • What steps your company can take to help bridge the current gender gap
  • Whether or not your company is financially competitive

The latest data from the U.S. Department of Commerce finds that on average, manufacturing workers earn 21% more than the median income for all workers, and women in manufacturing earn 16% more than the median income for all workers. Unfortunately, however, women in manufacturing still earn only 71% of the median income for men in manufacturing. Attracting and retaining more women for skilled positions in manufacturing means offering competitive, fair salaries, and other incentives. The following five best practices, generally advocated by the Manufacturing Institute, may help. We’ve also included some real examples of unique ways manufacturing companies around the country are promoting equal gender advancement, generated from the 2020 Women in Manufacturing study respondents:

Start at the top: Senior team members need to prioritize workplace diversity and communicate benefits to their teams. Some organizations have even tied executive incentives to diversity and inclusion goals. Progress should be monitored and communicated throughout the organization.

“We have a women’s resource group that was started in 2019 that promotes networking, STEM, and advancement of women in the manufacturing world.”

Prioritize flexibility: Women typically value flexible work options. Consider shifting from a presence-driven culture to one that is more results-oriented. Enable employees to balance their work and personal lives. Increasing flexibility can go a long way towards retaining skilled workers and ultimately trickles down to the bottom line.

Reassess the culture:  Gender discrimination — specifically the perception that men should be in charge — remains problematic in the manufacturing world. Address this bias through awareness training and other educational tools.

“Started men as diversity partners program to educate and share about unconscious bias and support/promote female colleagues.”

Become a sponsor: Corporate sponsorships help women succeed. Sponsors serve as mentors, coaches, and advocates. They can encourage an individual’s progress and provide a clear understanding of the leadership qualities and technical skills required for specific positions.

“[We have a] professional development program for women in manufacturing, designed to support women early in their manufacturing careers to encourage them to stay in manufacturing and/or within the company. The program provides a supportive environment for the women, and also supplies each woman with another female mentor within the company.”

Target your audience: When recruiting prospective employees, it’s important to zero in on specific groups. For example, your company might partner with vocational schools and K-12 schools that offer Science, Technology, Engineering and Math (STEM) programs. Incentivize your female employees to take an active role in the recruitment process or apprenticeship programs and to become role models for younger women that are hired.

“We have an Engineering Ladies Lunch and Learn (E3L) once a month to go over topics, training, [and] skills development for women at the company. This was developed by female engineers taking the initiative and it took a while for the leadership team to appreciate it.”

Contact your financial advisors to evaluate whether your company’s current compensation, training, and recruiting practices are gender inclusive. In addition to an array of financial reporting (Audit and Accounting Services) and tax compliance services (Tax Services), our RBT Manufacturing Group offers personalized, innovative strategies to help clients increase profitability. Contact us today to set up a consultation and develop strategies to become a more diverse workplace.

Sources: © 2020, Powered by Thomson Reuters Checkpoint, WiM

NY Manufacturers Tax Credits, Do You Qualify?

NY Manufacturers Tax Credits Do You Qualify

It’s not tax season just yet. But since it’s basically as American to search for sound ways to lower your taxes as it is to pay them, it’s never too early to have taxes on your radar and get prepared. As you know, you can claim deductions to reduce the amount you owe, but too often, manufacturers forget about the incredible opportunities that tax credits provide. In many ways, credits are an even more exciting way to save money because they can directly reduce the taxes you owe and in some cases, produce a refund. In order to simplify the process for you, we’re breaking down various manufacturing-specific incentives that are unique to New York State manufacturers.

Investment tax credit (ITC)

If you or your business placed a qualified property into service during the tax year, you may be entitled to this credit, up to 5% on your investment.

The ITC is a percentage of the investment credit base of qualified property placed into service during the tax year. Unused credits can be carried forward for 15 years (10 years for personal income taxpayers). A business that qualifies as a new business can also elect to receive a refund of unused credit instead of carrying it forward. See Investment tax credit (ITC) to learn more.

Manufacturer’s real property tax credit

You may be eligible to receive a credit equal to 20% of the real property taxes paid during the tax year on your New York State business property!

To be eligible, you must use your property principally for manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing. For more information about eligibility requirements, see Manufacturer’s real property tax credit.

Excelsior jobs program tax credit

Your company may be eligible to receive up to four fully refundable tax credit components:

  • excelsior jobs tax credit,
  • excelsior investment tax credit,
  • excelsior research and development tax credit, and
  • excelsior real property tax credit

If your business participates in the Excelsior Jobs Program and has received a certificate of tax credit from Empire State Development, you will be allowed to claim the credit. The amount of each credit component allowed is determined by Empire State Development. For more information about the Excelsior Jobs Program application and approval process, visit Empire State Development.

Alcoholic beverage production credit

If you are a registered distributor under Article 18 of the Tax Law (taxes on alcoholic beverages), you may be entitled to a tax credit.

If you produce 60,000,000 or fewer gallons of beer or cider, 20,000,000 or fewer gallons of wine, or 800,000 or fewer gallons of liquor within a tax year, you could receive a credit equal to 14 cents per gallon for the first 500,000 gallons that you produce in New York State.

You may also qualify to receive 4.5 cents per gallon for each additional gallon over 500,000 produced in New York State (up to 15,000,000 additional gallons for beer, cider or wine or up to 300,000 additional gallons for liquor). To learn more, see Alcoholic beverage production credit.

Don’t qualify for any of the credits we’ve mentioned?

Not to worry. Oftentimes, having an in-depth conversation with a tax professional about your unique business financials can save you a lot of time, frustration, and yes, money. For a complete list of credits and their requirements, see General business corporation (Article 9-A) tax credits and Business tax credits (Article 22). Or, to set up a brief consultative call with one of our RBT professionals who specialize in assisting manufacturing clients, don’t hesitate to contact our team, here.

Hiring in Hudson Valley: Where are the Workers?

Hiring in Hudson Valley: Where are the Workers?

As we’ve entered the digital age, we’ve all become increasingly accustomed to one-click culture.

Even if you’re used to New York traffic, or tend to be a traditional in-store shopper, you’re probably guilty of a thinner patience level. As you’re well aware, manufacturing shutdowns that resulted from the COVID-19 pandemic created unprecedented backlogs across industries. This new delayed-delivery world is a stark contrast for a society that’s used to getting our goods and services on demand. While the U.S. economic recovery we are currently experiencing is no doubt a huge relief and a sign of positive things to come, it’s recovering so rapidly from the coronavirus pandemic that it’s putting a big strain on many companies. The manufacturing industry is having a harder time finding materials or workers to fill a record number of open jobs. Experts explain that the shortages have triggered a sharp increase in inflation and in some cases have forced companies to scale back production. Most surprising of all? The shortage of labor, even as national unemployment still remains quite high. So, where are the workers the industry so desperately needs, and what is impacting New York manufacturing companies?

About 5 million fewer Americans are employed in manufacturing today compared to 20 years ago.

Employers hope to slow or reverse that trend in part by reaching out to groups traditionally underrepresented in the industry, and they’re under pressure to do that quickly. The median age of an American working in manufacturing is 44 years old according to the U.S. Bureau of Labor Statistics, and older workers are retiring faster than they are being replaced. Consider your own team for a moment. Have you evaluated the average age of your employees in the past year? It’s critical to have a replacement plan in place, and the reality is the competition is fierce, particularly in the Hudson Valley Region. Regional manufacturers are not only dealing with a retiring population but additional local competition. Consider the newly opened Amazon Distribution Center in the Town of Montgomery. Amazon employees at the more than one-million-square-foot fulfillment center will work alongside innovative technology to pick, pack and ship large customer items and household goods. In addition, Amazon will continue to hire for roles in human resources, operations management, safety, security, finance, and information technology. Meanwhile, site work has commenced on the $120-million, 1.2-million-square-foot Medline Pharmaceutical Warehouse in Montgomery which is being developed on 118 acres on the Aden Brook Farm site. Medline will relocate its current facility workforce of 340 in Wawaynada and plans to add 150 to 200 new positions in the coming years. And don’t forget the new $120 million dollar Amy’s Kitchen Factory plant set to open in Goshen in 2022, which is expected to employ 680 people at its massive 389,000-square-foot facility.

Given the reality local manufacturers face, it’s important to sit down with decision-makers and employees alike and determine what does and doesn’t work within your current business model.

Can you restructure your budget to accommodate an increase in pay and benefits to remain competitive? How do your core employees feel about your work culture? Do your team members feel valued and heard? As of July 6, 2021, the average annual pay for a factory worker in New York is $28,692 a year which works out to be approximately $13.79 an hour. Breaking this number down further, this is equivalent to $552/week or $2,391/month. According to ZipRecruiter’s current data, top earners (90th percentile) make $35,648 annually in New York. Because the average pay range for a factory worker in New York varies little (under $5,000), it suggests that regardless of location, there are not many opportunities for increased pay or advancement, even with several years of experience. This troubling statistic likely contributes to the mounting challenge in the road to re-staff and expand operations. Consider this information when you sit down to make transformative adjustments with your team. For more insight on how to help your business thrive and adapt, contact our Manufacturing Services Group today to schedule a brief conversation. Whatever the size of your venture, we can help you meet your immediate and long-term goals.

Sources: Wbur, U.S. Bureau of Labor Statistics, CNN, Real Estate In Depth

Marijuana Legalization Creates a Haze of Confusion for Local Governments

Marijuana Legalization Creates a Haze of Confusion for Local Governments

A recent bill legalizing recreational marijuana makes New York the 16th state to do so, and while advocates are praising the move, some are lost in a cloud of confusion. The bill makes it legal to possess small amounts of marijuana, launches programs to help communities that bore the brunt of the national and state drug war, and will eventually allow marijuana sales to people over the age of 21. So what does this mean for local municipalities, and how can local leaders navigate the complexities that accompany this new legislation? Here’s what you need to know.

New Yorkers can smoke cannabis in public wherever smoking tobacco is allowed, though localities and a new state agency could create regulations to further control public cannabis use.

Counties will not be able to prohibit recreational sales, but cities will. “Cities, towns, and villages would be able to have that discretion, but not counties as a whole,” Sen. Jeremy Cooney explained. “So, if you’re from Rochester or Monroe County, they can’t say that there will be no retail dispensary allowed in Monroe County.” While towns and cities across the state have a Dec. 31 deadline to opt-out of dispensaries and consumption sites, it is important to note that they will not be able to opt-out of legalizing weed altogether. Cannabis use, however, is not permitted in schools, workplaces, or inside a car.

If municipalities decide to allow it, they can regulate it by setting the hours, place, and manner, said John Kolesar, a lawyer with Harris Beach in New York City.

They can put the retail dispensaries or on-site consumption businesses into a certain zone or district. According to Kolesar, the residents of a community can force a binding vote if they disapprove of the government’s decision to opt-out, which allows residents to voice their opinions. Peter Baynes, executive director for the New York Conference of Mayors, which has been studying the rules, says village boards are the only ones who can choose on their own to put the decision to a binding vote of the public. The village would first have to opt-out, then make the public vote part of that law.

Some provisions of the legislation, according to Baynes and Sarah Brancatella, legislative director and counsel for the New York Association of Towns:

  • Retail outlets selling marijuana can only sell to those 21 and up.
  • If a government opts in, the retailer still must get a license to sell cannabis or to allow it to be consumed at their business.
  • Dispensaries and sites allowing public consumption of pot can be limited to specific areas through zoning.
  • Towns, villages, and cities can set up their own marijuana smoking rules for property owned or controlled by them, such as a park or playground.
  • Local governments can’t limit the number of dispensaries, but the new state Cannabis Control Board can. When issuing a license, that board can consider factors such as the number of outlets and how close they are to each other, traffic, noise, and more.
  • Retail dispensaries or on-site consumption sites can’t be located within 500 feet of school grounds or within 200 feet of a house of worship.
  • Marijuana is subject to the same laws as smoking or vaping tobacco. It can’t be smoked in a workplace, bar or restaurant, an indoor pool area, public transportation, childcare facilities, colleges, hospitals, indoor arenas, zoos, or bingo areas.
  • It also can’t be smoked with 100 feet of school grounds or on a school bus.

Marijuana sales won’t start until New York sets up regulations and a proposed cannabis board, however, possession and use are now legal.

Assembly Majority Leader Crystal Peoples-Stokes has estimated it could take 18 months to two years for sales to begin. Policymakers can face the uncertainty of marijuana revenue by budgeting it cautiously. They can put the money toward savings, for example, or spend it after it is collected. Local governments considering using the funds for ongoing spending priorities that require sustainable revenue streams should be careful about relying too heavily on marijuana taxes. Understanding the short- and long-term effects of budget-balancing actions such as these can help officials make decisions that put their communities on a sound fiscal footing for years to come. Lawmakers estimate the legislation will generate $1.2 billion in annual sales by 2023. A total sales tax rate of 14% includes 9% allocated for the state, 3% for the municipality where the sale is made, and 1% for the county. From that 9%, 40% has been earmarked for communities disproportionately affected by prior drug laws, 40% for schools and 20% for drug treatment and education. A regulated adult-use market would create 76,000 jobs by 2027, according to MPG’s market analysis that was prepared for the New York Medical Cannabis Industry Association.

Still feeling like you’re in a fog of confusion?

You’re not alone. This is a complex issue that requires legal expertise and a lot of consideration from community members. As there are further developments, such as the appointments announcement for the cannabis control board, or as new regulations are drafted, our Firm will continue to inform local government leaders. Please feel free to contact our dedicated RBT team to discuss questions you may have. Additionally, if you have HR questions, please reach out to our wholly-owned subsidiary Visions HR, to connect with HR professional Janet Giannetta.

Sources: Spectrum, PEW, Brookings, NYT, LoHud, SHRM, BCNYS

KPI Keys to Success

KPI Keys to Success

Struggling to stay competitive in today’s ever-evolving business world?

Product availability and dependable distribution are critical components your team needs to master. If your team isn’t aligned with your mission, setting attainable goals, or delivering in-demand products, it’s time to press pause. Having a quality product won’t get your company very far if it doesn’t get to your customer. With decades of experience working with manufacturing industry leaders, we’ve established that the best practice you can adopt is to assess your key performance indicators (KPIs) every three to six months to ensure your methods are useful and complete. Read on for a refresher to pass along to your team if it’s about that time to reevaluate progress and meet goals before 2021 ends.

KPIs measure key activities within a company to ensure it is operating with optimum success.

It is important to distinguish between a performance metric (which also measures activity), and a KPI.  A performance metric can be used to measure a variety of activities ranging from the number of staff meetings employees attend, to the amount of product that is available to meet customers’ needs. A key performance indicator measures activity that is critical to the success or failure of a company. While measuring the number of staff meetings employees attend won’t make or break the company, tracking the amount of product available for customers is a key indicator of a company’s ability to successfully compete in the marketplace.

KPIs are typically limited in number because they track only critical business aspects.

A company may have three or four KPIs; each department may also have three or four. If a KPI is put in place, management must commit to having someone log the activity and monitor the activity. Management must also define a clear course of action it will follow once the results of the KPI are known. In addition to evaluating critical activity, a KPI must:

  • Be realistic – a KPI to eliminate downtime is not realistic. An effective KPI would be “to reduce downtime by 5% through scheduled maintenance days”
  • Be specific to meet goals: “delivered on time” is not specific. A better KPI is “to complete delivery within three days of receiving the customer’s order”
  • Be quantifiable, such as tracking the rate of returned product
  • Highlight areas where increased efficiency/decrease in use of resources can be achieved
  • Illustrate the progress toward attaining a goal by presenting data in a chart or graph
  • Help identify seasonal trends

Implementing and tracking key performance indicators provides management with reliable data to streamline decision-making.

KPIs encourage a team effort by promoting inter-departmental cooperation and offer clarity for workers in terms of performance expectations. Individual departments will have key performance indicators that further the company goal of providing superior service by reducing the lead time. A KPI for the manufacturing division might be to track the cycle time, while the distribution division might track the on-time and complete shipping rates, and the customer service department might track the rate of returned products.

Here is an example of a good manufacturing facility KPI:

Company goal: To provide superior customer service through quick delivery.

Key performance indicator: Lead time

Definition: Lead time is the length of time it takes from the beginning of the
manufacturing process to the time the final product is delivered to the customer.

How it will be measured: Tracking the customer waiting time, which is the length of
time between when a customer places an order and the customer receives the product.

Target: To reduce lead time by 2 percent.

Implementing KPIs can increase the entire organization’s efficiency and production capability.

An added benefit? KPIs can generate a positive attitude among team members by letting individuals know how they contribute to a company’s overall success. Taking simple, cohesive steps like these can reenergize your team and ensure all departments are synchronized in their daily, monthly, and quarterly objectives. For more ideas to help your business thrive in these challenging times, contact our Manufacturing Services Group today. Whatever the size of your venture, we can help you meet your goals, now and for the future.

Marijuana Legalization Creates a Haze of Confusion for Healthcare Industry

Marijuana Legalization Creates a Haze of Confusion

A new bill legalizing recreational marijuana makes New York the 16th state to do so, and while advocates are praising the move, some employers are lost in a cloud of confusion. The bill makes it legal to possess small amounts of marijuana, launches programs to help communities that bore the brunt of the national and state drug war, and will eventually allow marijuana sales to people over the age of 21. So what does this mean for the healthcare industry as a whole, and how can organizations navigate the complexities that accompany this new legislation? Here’s what you need to know.

New Yorkers can smoke cannabis in public wherever smoking tobacco is allowed, though localities and a new state agency could create regulations to further control public cannabis use. Cannabis use, however, is not permitted in schools, workplaces, or inside a car. But, the cannabis confusion and concern don’t end with this new set of rules. A National Institute on Drug Abuse study found that employees who tested positive for cannabis had 85% more injuries, 55% more industrial accidents, and 75% higher absenteeism rates. With life or death stakes in the healthcare industry, it is not hard to see why employers choose to offer a safer work environment through effective drug and alcohol testing.

As it is now illegal to discriminate against someone for legal use of cannabis, refusing to employ someone merely because of the presence of cannabis in a drug test result could expose the employer to a discrimination claim even if the employer’s decision was unrelated to the applicant’s cannabis use. The new cannabis law amends NYS Labor Law 201-d, and according to the Business Council of New York State, the new law does not prohibit testing for marijuana. Employers remain free to test both applicants and employees under the law. However, for employers who are not required to do pre-employment testing, doing so may provide more risk than reward. Because recreational use of marijuana is now legal, employers can no longer discipline or discharge an employee simply for having marijuana in his or her system while at work, as may be revealed by a drug test. The law requires that, before taking adverse employment action against an employee for marijuana use, an employer must show that the employee manifested “specific articulable symptoms” of marijuana impairment. A positive test for marijuana will not be sufficient to establish impairment under the law. A positive test, however, may still have value in supporting an employer’s determination that symptoms exhibited by an employee were related to marijuana use by confirming that the employee used marijuana. While there have been some indications that the National Council of State Boards of Nursing is moving toward providing individual state boards with more nuanced guidance to cases involving positive THC tests in nurses, one that takes into account a number of circumstances beyond the test results, the intent of state boards of nursing and employers will by definition remain one of erring on the side of patient safety. And while nurses who have been dismissed by hospitals for positive THC tests have begun to win cases against their employers, it remains an incredibly complex issue.

Employers can fire someone who is working while impaired by marijuana, according to New York’s medical marijuana law, but proving impairment can be complicated. “Employers are allowed to prohibit marijuana use at work and allowed to prohibit employees from reporting to work impaired,” said Geoffrey Mort, a member of the New York State Bar Association’s Cannabis Law Committee. While companies with federal contracts and grants, as well as federal agencies, must have a drug use policy that’s enforced, enforcement is difficult because unlike testing for alcohol or other substances, marijuana shows up on drug tests long after its impairing effects subside. The window for testing positive for cannabis is anywhere from three days to seven days (or longer) for urine and saliva testing and up to 90 days for the more sensitive hair testing. Employers should take caution when disciplining employees because The Americans with Disabilities Act (ACA) protects those who take medication for a disability, and because of how long THC stays in the system, it may be challenging to prove an employee was under the influence of marijuana on the job. Employers must ensure they engage in an “interactive dialogue” and consider any reasonable accommodations before taking adverse actions against an employee for reasons related to medical or recreational marijuana. Even in the face of a positive drug test, employers cannot and should not automatically terminate the employee, but should first consider whether the employee is a certified user. If the employee is a certified user, employers must engage in an interactive dialogue to determine whether it must accommodate. While employers do not have to accommodate employees who cannot adequately perform their job functions or are excessively absent due to the use of medical marijuana, employers also cannot automatically terminate an employee who is a marijuana user if he/she tests positive for drug use.

Now is an important time for New York healthcare organizations to reconsider company policies and procedures relating to pre-employment drug testing as well as establishing impairment signals for employers to identify. If reasonable suspicion occurs on the job, the employer should explain to an employee what has been observed and a policy should outline how suspected impairment will be dealt with. Generally speaking, managers and supervisors should be trained to observe impairment signals and employees should be educated about the company marijuana-use policy and the repercussions for failed tests, including random, post-accident, or reasonable suspicion tests.

Marijuana sales won’t start until New York sets up regulations and a proposed cannabis board, however, possession and use are now legal. Assembly Majority Leader Crystal Peoples-Stokes has estimated it could take 18 months to two years for sales to begin. Lawmakers estimate the legislation will eventually bring in $300 million a year to cover the state’s cost of regulating and enforcing the program, with the remainder divided among schools, drug treatment and prevention programs, and a fund for investing in job skills, adult education, and other services in targeted communities. A regulated adult-use market would create 76,000 jobs by 2027, according to MPG’s market analysis that was prepared for the New York Medical Cannabis Industry Association. Still feeling like you’re in a fog of confusion? You’re not alone. This is a complex issue that requires legal expertise and a lot of consideration from management and HR professionals alike. Please feel free to contact our dedicated RBT team to discuss your manufacturing company needs. Additionally, if you have HR questions, please reach out to our wholly-owned subsidiary Visions HR, to connect with HR professional Janet Giannetta.

Sources: NYT, LoHud, SHRM, BCNYS, AJN

Marijuana Legalization Creates a Haze of Confusion for Construction Industry

Marijuana Legalization Creates a Haze of Confusion

Governor Andrew Cuomo signed a bill legalizing recreational marijuana last week, making New York the 16th state to do so. The bill makes it legal to possess small amounts of marijuana, launches programs to help communities that bore the brunt of the national and state drug war, and will eventually allow marijuana sales to people over the age of 21. So what does this mean for the construction industry as a whole, and how can companies navigate the complexities that accompany this new legislation? Here’s what you need to know.

New Yorkers can smoke cannabis in public wherever smoking tobacco is allowed, though localities and a new state agency could create regulations to further control public cannabis use. Cannabis use, however, is not permitted in schools, workplaces, or inside a car. But, the cannabis confusion and concern don’t end with this new set of rules. A National Institute on Drug Abuse study found that employees who tested positive for cannabis had 85% more injuries, 55% more industrial accidents, and 75% higher absenteeism rates. Until recently, challenges to employee terminations for testing positive for marijuana were almost always dismissed and justified under employers’ drug-free workplace policies. The following categories of construction workers can be tested under the new law:

Employers can fire someone who is working while impaired by marijuana, according to New York’s medical marijuana law, but proving impairment can be complicated. “Employers are allowed to prohibit marijuana use at work and allowed to prohibit employees from reporting to work impaired,” said Geoffrey Mort, a member of the New York State Bar Association’s Cannabis Law Committee. Regardless of any state or local laws, it is still prohibited for commercial truck drivers to operate a motor vehicle under the influence because of federally imposed DOT drug testing requirements. According to Overdrive, the DOT has confirmed multiple times that its stance on marijuana use has not changed and won’t until action is taken on the federal level. While companies with federal contracts and grants, as well as federal agencies, must have a drug use policy that’s enforced, enforcement is difficult because unlike testing for alcohol or other substances, marijuana shows up on drug tests long after its impairing effects subside. Employers should take caution when disciplining employees because The Americans with Disabilities Act (ACA) protects those who take medication for a disability, and because of how long THC stays in the system, it may be challenging to prove an employee was under the influence of marijuana on the job. Employers must ensure they engage in an “interactive dialogue” and consider any reasonable accommodations before taking adverse actions against an employee for reasons related to medical or recreational marijuana. Even in the face of a positive drug test, employers cannot and should not automatically terminate the employee, but should first consider whether the employee is a certified user. If the employee is a certified user, employers must engage in an interactive dialogue to determine whether it must accommodate. While employers do not have to accommodate employees who cannot adequately perform their job functions or are excessively absent due to use of medical marijuana, employers also cannot automatically terminate an employee who is a medical marijuana user if he/she tests positive for drug use.

As it is now illegal to discriminate against someone for legal use of cannabis, refusing to employ someone merely because of the presence of cannabis in a drug test result could expose the employer to a discrimination claim even if the employer’s decision was unrelated to the applicant’s cannabis use. The new cannabis law amends NYS Labor Law 201-d, and according to the Business Council of New York State, the new law does not prohibit testing for marijuana. Employers remain free to test both applicants and employees under the law. However, for employers who are not required to do pre-employment testing, doing so may provide more risk than reward. Because recreational use of marijuana is now legal, employers can no longer discipline or discharge an employee simply for having marijuana in his or her system while at work, as may be revealed by a drug test. The law requires that, before taking adverse employment action against an employee for marijuana use, an employer must show that the employee manifested “specific articulable symptoms” of marijuana impairment. A positive test for marijuana will not be sufficient to establish impairment under the law. A positive test, however, may still have value in supporting an employer’s determination that symptoms exhibited by an employee were related to marijuana use by confirming that the employee used marijuana.

Now is an important time for New York contractors to reconsider company’s policies and procedures relating to pre-employment drug testing as well as establishing impairment signals for employers to identify. If reasonable suspicion occurs on the job, the employer should explain to an employee what has been observed and a policy should outline how suspected impairment will be dealt with. Generally speaking, managers and supervisors should be trained to observe impairment signals and employees should be educated about the company marijuana-use policy and the repercussions for failed tests, including random, post-accident, or reasonable suspicion tests. While marijuana legalization poses a broad variety of challenges for employers, changes are especially complicated for both construction employers and owners of construction projects who are subject to absolute liability for gravity-related worksite injuries under the “Scaffold Law” which exists only in New York. Even before marijuana was officially legalized in New York, The AGC NYS assembled a group of more than 30 organizations calling on the Legislature to address their concerns surrounding the “Scaffold Law” because existing case law makes clear that the impairment of a worker does not create a defense for a construction employer or project owner. The group argues that without major updates to the “Scaffold Law,” the industry will face a negative safety impact, even higher construction costs, and further degradation of a construction liability insurance market that is already on life support. The group is urging the Governor and Legislature to introduce a comparative liability standard to replace absolute liability generally, or at a minimum where the injured worker was impaired by cannabis or another substance. You can learn more about this industry effort, here.

Marijuana sales won’t start until New York sets up regulations and a proposed cannabis board, however, possession and use are now legal. Assembly Majority Leader Crystal Peoples-Stokes has estimated it could take 18 months to two years for sales to begin. Lawmakers estimate the legislation will eventually bring in $300 million a year to cover the state’s cost of regulating and enforcing the program, with the remainder divided among schools, drug treatment and prevention programs, and a fund for investing in job skills, adult education, and other services in targeted communities. A regulated adult-use market would create 76,000 jobs by 2027, according to MPG’s market analysis that was prepared for the New York Medical Cannabis Industry Association. Still feeling like you’re in a fog of confusion? You’re not alone. This is a complex issue that requires legal expertise and a lot of consideration from management and HR professionals alike. Please feel free to contact our dedicated RBT team to discuss your construction company needs. Additionally, if you have HR questions, please reach out to our wholly-owned subsidiary Visions HR, to connect with HR professional Janet Giannetta.

Sources: Construction Business Owner, NYT, LoHud, Truckers Report , SHRM, BCNYS

APPLY NOW: $1 Million in COVID Recovery Funding Now Open

APPLY NOW: $1 Million in COVID Recovery Funding Now Open

Four centers within the New York Manufacturing Extension Partnership (NY MEP) network have launched competitive grant programs that will help manufacturers solve challenges created by COVID-19, emerge from the crisis more resilient and adaptable, and prepare for future emergencies. The NY MEP is a network of organizations that provide growth and innovation services to small and mid-sized manufacturers in every corner of the state to help them create and retain jobs, increase profits, and save time and money. Supported through a combination of federal and state funding, the NY MEP is overseen by Empire State Development’s Division of Science, Technology, and Innovation (NYSTAR). In 2019, the NY MEP created or retained 5,275 manufacturing jobs and generated $992 million in company cost savings, new investments, and increased or retained sales. Combined, the four programs which are open to companies in all regions of New York will award nearly $1 million to manufacturing and technology companies in New York State. The programs include:

  • Personal Protective Equipment Fund, led by ITAC
  • Supply Chain Grant Program, led by the Center for Economic Growth (CEG)
  • Next Generation Grant Program, led by the Manufacturing & Technology Enterprise Center (MTEC)
  • Manufacturing Reimagined Fund, led by FuzeHub

The Personal Protective Equipment Fund, managed by ITAC, the New York City regional NY MEP center, will award a total of $250,000 to companies in two phases:

  1. Phase 1 focuses on companies extending the lifespan of personal protective equipment (PPE)
  2. Phase 2 will support the scaling needs of PPE manufacturers across New York, selected manufacturers will receive a maximum $10,000 grant

The Supply Chain Grant Program, managed by CEG, the Capital Region’s NY MEP center, will award a total of $200,000 toward projects that help manufacturers address business challenges caused by pandemic-related supply chain disruptions. Up to 20 manufacturers with facilities in New York will receive a maximum $10,000 grant, which will help recipients take steps to optimize their supply chains, explore new markets and products, identify new customers and implement processes to become more competitive. Funding may be used to offset the costs of consultants, engineering assistance, implementation, training, and project-related materials.

The Next Generation Grant Program, managed by MTEC, the Mid-Hudson regional NY MEP center, will award a total of $350,000 to companies that need help optimizing their operations for the post-pandemic era. Recipients will receive up to $10,000 in services to ensure they are operating safely, effectively, and efficiently in a virtual business environment. MTEC and its partners will help identify ways to improve operations as well as opportunities to introduce new technologies or processes. The program’s areas of focus are lean manufacturing, cybersecurity, quality, and engineering.

The Manufacturing Reimagined Fund, managed by FuzeHub, the statewide NY MEP center, will award a total of $170,000 toward projects that align with COVID-related recovery efforts. Recipients will receive a maximum of $10,000 in technical assistance from a NYSTAR Innovation Network organization. Eligible projects will help manufacturers manage challenges created by COVID-19, emerge from the crisis more resilient and adaptable, and prepare for future emergencies. To qualify, applicants must attend one of FuzeHub’s “Manufacturing Reimagined” workshops or webinars.

The four grant programs are part of NY MEP’s larger COVID Recovery Initiative. Learn more here.   At RBT, our Manufacturing Services Group works with businesses in diverse industries including building materials, food processing, specialty sporting goods, commercial lighting, health, beauty, pharmaceuticals, and more. Whatever the size of your venture, we can help you meet your goals, now and for the future. Contact us today to connect and schedule an appointment.

Source: NY MEP

ROI Renting Vs Buying Equipment

ROI Renting vs Buying Equipment

While 2021 brings continued economic uncertainty, it’s always a good idea to use a new calendar year as an opportunity to reevaluate business plans. What’s working and what’s not? For manufacturing professionals, this can be a literal consideration: what equipment is running efficiently and what’s nearing the end of its useful life? Aging, worn machinery is costing you valuable time and money that’s preventing you from being competitive. Determining the return on investment for buying versus renting equipment requires a deeper dive into your company’s cash flow and your intentions.

Buying New

Some people have personal biases when it comes to purchasing items. Think of other investments you’ve made. Are you a staunch advocate of homeownership over renting property? Maybe you’re always trying to dissuade your friend from leasing the latest and greatest model car because they won’t acquire any equity and it won’t be their own asset. Try not to let feelings about leasing bleed into your business model because buying won’t always equal profitability. To determine if it’s time to buy, you need to assess the performance of what you’re currently relying on. Track the machine’s cycle time and uptime (when the machine is producing revenue) as well as any downtime required for regular or unscheduled maintenance. This data will help you to determine if new equipment will produce the ROI required to rationalize the purchase. Your manufacturing company has needs unique to your products and services. In some circumstances, buying is the way to go, as leased assets don’t qualify for 100% first-year bonus depreciation.

Opting to Rent

If you opt to rent or lease your equipment, you’ll get brand new machinery operating at maximum output and efficiency. You may also be able to shop outside of your budget, opening opportunities to test-drive cutting edge technology before committing to a major purchase. Consider the long-term usage of the equipment and how much profit it will generate in its lifespan. For example, if you’re only using the equipment to fulfill a two-year contract and you don’t see other profitable opportunities, maybe it’s better to lease that piece for two years rather than make a huge long-term investment to fulfill a temporary need. Let’s talk tax benefits. While annual deduction limits may apply, generally speaking, payments for leases will be tax-deductible and qualify as “ordinary and necessary” business expenses. But as with any contract you’re tied to, you must read the fine print and make sure your business plan is aligned with the terms and conditions. It’s never fun to sign off on a big expense, only to be surprised by an early-termination fee you weren’t aware of.

We wish there was a straightforward, clear “winner” in your decision, but as is standard in business, the most economical choice is going to depend on the circumstances surrounding the machinery. In some situations, purchasing machinery and acquiring an asset you know is going to build your business equity is the best decision. In other situations, you will find leasing is the right move, so you can test out a high-tech item without the risk of purchasing an expensive machine that’s bound to become obsolete when the latest model rolls out. Our best advice is to consult a professional to weigh the pros and cons carefully before committing to a big financial decision. Our team is always just a phone call away to answer questions unique to your company’s situation.

Source: Accounting Freedom