Ultimate Guide to Nevada Construction Business and Law

An Overview of Nevada Construction Laws

One of the basic aspects of construction is that it occurs under the auspices of some sort of law. The first and best way to describe constructional law in any state is to say that while construction means building something, construction law simply means the laws that govern how people build things. These laws cover a lot of ground, ranging from how to comply with municipal codes for building inspections and permits to the terms that would govern a residential construction project. Even the state laws that govern "real property" often have some bearing on the construction industry — for instance, in regards to liens, provision of materials or foreclosing on, purchasing and obtaining title to real property .
One of the great things about the building industry is that, although each state’s laws will provide its own set of circumstances, they are also very similar in some ways. This is especially true in the case of a state like Nevada, which will be covered in this article. The construction business is rife with opportunities for disputes, many of which find themselves easily and readily resolved by the courts, whenever applicable, simply because of the use of historically tested principles and rigid legal standards. It is the goal of this article to provide a fundamental understanding of how some of these laws will apply to the construction business in Nevada.

How to Launch a Construction Company in Nevada

Nevada has an interesting construction market, as the state has indicated that it wants the construction business sector to be buoyant and expanding; however, at the same time, it is restrictive, making it difficult to do construction business in the state. All of the typical issues that one who wants to conduct business in the construction industry should think about are present in Nevada. As one example, if you plan to start a construction business in Nevada, you must, of course, be licensed with the Nevada State Contractor’s Board. Nevada has very strict licensing requirements, which include passing an examination. In order to become licensed, the potential contractor must pass testing that measures capability in such areas as business management, builder’s construction law, and other vital areas including general building code requirements.
In addition to passing the examination, the potential licensee must also show financial responsibility by submitting a financial statement certified by a public accountant, as well as proof that he or she has obtained necessary liability and worker’s compensation insurance for the upcoming business year. There are several different types of licenses available, and those who wish to open a new business should research the types and licensing procedures that are applicable in Nevada.
New businesses in the construction industry will also need to keep the following in mind: Net 10 bonds are required for work exceeding $10,000 in value; if the business will be doing commercial construction, then it must post a $20,000 surety bond; and owners must show responsibility in managing funds and being able to account for project funds. Nevada also requires that a new business have average net earnings of at least $25,000 over the past 5 years. Nevada does not have a residency requirement for contractor’s business licenses; however, Nevada business owners must refrain from using trade names for their new venture. Despite its many restrictions and requirements, Nevada is an attractive state for a new construction business. Its location and climate mean that building is almost constant. The complaint is that there are too many contractors for too few jobs.

Nevada Contractors Must Obtain Licenses to Operate

Nevada contractors must hold at least a current painting contractor’s license to offer their contracting services to the public. But even that is not true of all painting contractors.
Additional specific licensing requirements depend on the type of business structure the contractor is using, the type of work they plan to do, and whether the work will be done as residential or commercial work. Note that the term "general contractor" as used in Nevada denotes a trade class called a Primary Tradesman Commercial General Building Contractor.
New entry-level contractors will have to obtain a joint license as a partnership with a Nevada state Contractor and be licensed as such. This requires filing company incorporation papers with the Nevada Secretary of State. The license comes with an initial fee of $600 and it is renewable each year for $300. The additional licensing requirements, such as obtaining a certificate of scoring called a Surety Bond that does not exceed $5000. Registration with the Department of Taxation and the Nevada Attorney General for State Worker’s Compensation insurance are also required. General building contractors must also have 60 months of experience and pass a trade exam, as well as the general business and law parts of the exam.
General contractors legally can do their own home improvement or remodeling work. They can also operate without a construction bond of up to $100,000. Individual contractors can also obtain a general contracting license, but they have to take either a basic business management exam or a residential exam that includes business management.
The regulation and enforcement of Nevada construction license laws is handled by the State Contractors Board, the North Las Vegas Department of Building and Safety, the Nevada Secretary of State, and Bishop’s Ordinance. Contractors are supposed to carry their licenses with them at all times, but that is only if they expect to receive any cash payment or any other payment other than by credit card or third party check.

Labor Rules and Regulations for the Nevada Building Industry

Labor laws within the Nevada construction sector run the gamut from workers’ rights and safety regulations to wage laws and other employment guidelines.
The industrial safety standards include both permanent and temporary conditions. The state has basic safety requirements for most industries, which includes training in first aid, corner protection, scaffolding safety, and electrical protection.
Wage laws determine how much workers at various levels are entitled to per hour or annually. Nevada imposes a minimum wage that is applicable to different situations.
Employment guidelines include a host of provisions, such as rights to unemployment compensation and wage assignment rules. Workers in Nevada are entitled to the unemployment benefits available under state unemployment insurance. This temporarily covers some of the wages lost until they are able to seek full-time employment. These benefits are available so long as workers are looking for eligible jobs on a regular basis during a designated period of time, which is generally 15 weeks.
Wage assignments involve an employer’s obligations to pay a debt owed by a worker. Specific procedures must be followed to comply with state law.
Workers’ rights are also covered under the state’s wage retaliation law. Among the actions that are prohibited under this law are denying a worker the right to file a complaint or to participate in an inquiry, hearing, or proceeding regarding discrimination in wage payments.
An employment policy guide and labor law guide can help employers prepare authoritative manuals. These publications help answer questions about best employment practices, how to draft appropriate HR policies, and how to address legal issues related to the workplace.
Not only do labor laws govern many aspects of employment, but they also affect the workplace in a deeper way. Construction employees deserve to have labor laws that protect their rights and provide for their safety.

Resolving Disputes in Nevada Construction Projects

The Nevada construction industry sees its fair share of common disputes which can arise between various parties involved on a project. Contractors, subcontractors, suppliers, developers, those who have lent money for a construction project and those that owe money as part of the construction project can find themselves in the unfortunate position of being on opposite sides of a legal dispute. Property owners may find themselves with disputes on projects where their contractor has not completed work, the work is unsatisfactory or the contractor has failed to pay subcontractors.
Other examples of common construction disputes include disputes between contractors or between subcontractors over differing interpretations of an agreement, performance issues and construction defects. Payments owed under a contract not being timely provided can lead to disputes as well.
Construction defects generally are described as non-conforming or defective work, which is work not done in accordance with the plans or specifications or work not completed at all . A claim may also be made for defective design, material or workmanship which causes the structure to be unsafe or cause significant damage to persons or property. Any material deviation in the work performed or materials provided, including the quality or suitability of work or materials for the owner’s intended use, may be deemed a "defect" for which the contractor is liable. Supervening conditions which materially change the cost of performance of obligations of either party may give rise to a claim for breach of contract as well. When such a claim is made, however, the contractor may be able to avoid liability by proving that the problem arose from conditions that a reasonably skilled contractor could not have discovered in a timely fashion and which could not have been avoided by him. An injury caused from a defect can be the basis for a claim for damages.

Nevada’s Environmental and Zoning Laws and Building Projects

As with other states, Nevada has zoning and environmental laws that can affect construction. Most of the effect is indirect. Sometimes zoning laws can have an effect on the size and/or layout of the project. However, the most substantial effect of zoning is the ability to site a project on a particular parcel of land. Usually, zoning ordinances will set forth the types of uses allowed on certain parcels and the limitations on those uses. Zoning ordinances vary widely on the types of uses permitted, but typically construction and other activities on properties is allowed as long as the use is consistent with the zoning regulations for a particular parcel of land. Because zoning ordinances are so area specific, the process for applying for zoning variances must be reviewed on a case by case basis.
One of the most well known forms of zoning regulation is Environmental Impact Statements ("EIS") which are some times required of Federal Government entities in connection with certain activities. EIS requirements were created by The National Environmental Policy Act of 1969 ("NEPA"). NEPA requirements have been interpreted to apply to federal contractors and other entities who are acting on behalf of the federal government. Thus, an EIS or NEPA review may be necessary before a project is undertaken.
An EIS is a document that describes the effects a project will have on the environment, including information such as the types and amounts of materials to be used, the anticipated power required, and the possible discharges. The EIS will discuss what if any negative effects a projects will have on the environment, and what the project will do to minimize those effects. A well written EIS will state what actions would be taken to mitigate the potential harmful effects of the project and will also discuss the alternative locations that were considered for the project. If appropriate, the EIS will also provide information on alternate means of achieving the applicable purpose for the project. This type of review is usually necessary at the early planning stages of a project or if a NEPA review is required. A general contractor or other contractor usually need only pass through this process in connection with federal government projects, however, they must be mindful of the time it will take in connection with getting approvals to proceed.

All About Construction Insurance and Bonding for Nevada Companies

A contractor needs at minimum to carry general liability insurances for Bodily Injury and Property Damage, as well as Auto insurance, Workers’ Compensation, and Unemployment insurance. Depending on the type and scope of work a contractor does and the types of contracts they enter into, they may also need to consider Professional Liability, Employment Practices Liability, Pollution Liability, Excess Liability, and Builder’s Risk.
If your company does public works contracts in Nevada, a Financial Responsibility Guarantee Bond is required. These bonds generally require your company to maintain a minimum net worth of $200,000. Nevada law also requires contractors to obtain a public works performance bond and payment bond in certain circumstances, which bonds generally are issued by a surety company.

Trends that Will Affect the Nevada Building Industry

Looking ahead, the Nevada construction industry can expect to see advancements in a variety of areas including technology, sustainability, and a greater emphasis on owner advisement. As a city steeped in tourism, Las Vegas continues to attract massive engineering projects and development across the region. While the whole of Southern Nevada has been steadily improving in recent years, the city is where the majority of major construction in the state is happening. In 2018, it was noted by the Las Vegas Review-Journal that the Clark County Department of Building and Fire Prevention issued $4.1 billion in building permit valuations, which is essentially a measure of new construction projects being planned. As a testament to the area’s booming economy these statistics show the demand for new commercial buildings and structures.
Emerging trends indicate increased usage of building information modeling (BIM) to increase efficiency and cut costs. BIM refers to software that helps owners and developers better visualize designed spaces. As these software advancements continue to move toward widespread adoption, architects and engineers have benefitted by having various states of a project to choose from to find the most efficient means of construction. Yet despite this, little has changed with respect to project management and control. As BIM and other software-based solutions become standard operating procedure, it will be important for management to adapt and evolve. Facing potential extinction as the new generation enters the workforce, superintendents will need new skillsets to survive. Older generations of superintendents are struggling with adapting to this era of technology. The future demands will involve more thoughtful executive level project management and control, and this will be difficult for a generation of workers not trained in this rigorous method of construction.
Sustainable building practices have also continued to emerge as a key area of focus. As part of this trend sustainable building practices have steadily transformed from ethical choices and social responsibility, to compliance based controls, to becoming a new standard of practice. For guidance on building sustainably, there are several systems commonly used in the state. One of the most commonly used is the American Society for Testing and Materials (ASTM) Standard Guide for Green Property Development. This guide provides criteria for construction and property development that go beyond basic environmental protections and provide for best practices in reducing air and water pollution , energy efficiency, and water conservation. Another system that is gaining traction is the Living Building Challenge (LBC), this system provides additional and more rigorous measures than the ASTM Guide. LBC divides building space into four areas, each of which contains 20-30 credits and a project must attain all credits in each category to earn the LBC certification. The areas include place, energy, health and happiness, and beauty and beauty. Previously this certification was reserved for large scale construction but has been gaining momentum with smaller projects as well. One thing is clear, regardless of the rating system that is adopted, green building will continue to evolve and encounter legal hurdles. It is important that developers working on green or sustainable building understand the various rating systems and the responsibilities they impose.
Workforce availability has also driven a wave of new mechanization. The main driving force of the construction industry is the availability and cost of labor. As the state strives to meet the needs of a growing population while addressing the increased costs of labor, a value chain at every level of construction has emerged. Using prefabrication and mechanization contractors can save a significant amount of money by saving on labor costs and reducing rework. As Southern Nevada continues to grow, the need for affordable housing will drive demand for more multifamily buildings and distribution centers, which will in turn necessitate a need for new and innovative methods of construction. Reduced submittal and approval time helps projects to meet the needs of developers by compressing schedules and costs, shortening timelines, and bringing new construction to the market sooner.
As construction continues in Nevada, a key challenge will be attracting and retaining the necessary skilled labor to stay competitive. New technology will need to be leveraged to face the issue of labor availability. Automation has seen significant improvements in recent years and will continue to be a major driver in the construction industry going forward. While this will adversely impact jobs that could have otherwise been offered to young people entering the trades, the trade off will be the ability to attract new talent and increase the safety and oversight of projects.