This article is intended for South Texas construction employers, HR managers, and contractors who need to understand the critical employment law changes and court rulings taking effect in 2026. These developments will directly impact hiring, firing, wage compliance, and risk management in the construction industry. This article focuses on the most important 2026 employment law changes and court rulings, with practical guidance on adapting your operations and minimizing liability. Staying informed and compliant is essential, as these changes carry the potential for significant liability and operational impact.

If you manage a construction workforce in South Texas, employment law construction 2026 has shifted the ground beneath your feet. Five recent appellate decisions from the Fifth Circuit and Texas courts are rewriting the rules on how to investigate misconduct, enforce arbitration agreements, handle employee refusals, discuss former workers, and manage prevailing wage compliance on public projects. This is not theoretical legal commentary—these are rulings that will determine whether your next termination holds up or becomes a six-figure liability.

ABC South Texas has been tracking these developments closely because they hit merit shop contractors where it matters: day-to-day workforce decisions that can make or break your bottom line. In light of recent legal changes, employer obligations are expanding, requiring contractors to stay up to date on new compliance requirements and legislative updates. Here is what you need to know—and what you need to change—before your next hire, fire, or public works bid.

2026 Employment Law Construction Changes: Key Regulations and Court Rulings

The following table summarizes the most important 2026 employment law changes and regulations affecting construction employers. These updates, along with recent court decisions, directly impact compliance, risk management, and day-to-day operations for South Texas contractors.

These changes, combined with the five key court rulings discussed below, form the foundation of employment law construction 2026 and should be top priorities for compliance and risk management.

Key Takeaways

The urgency is real. Recent Fifth Circuit and Texas appeals decisions from 2025–2026 are quietly reshaping employment practices across South Texas construction, and many contractors are still operating under outdated assumptions.

• Post-complaint “fishing expeditions” are now evidence against you. In Phillips v. Enterprise Products Co. (5th Cir. 2026), a supervisor’s email celebrating newly discovered old violations became proof of retaliatory intent. Careless digital communications can convert a clean termination into a jury trial.
• Unsigned arbitration agreements are worthless paper. The Fifth Circuit in Mertens v. Benelux Corp. (2026) refused to enforce an arbitration clause because both parties had not signed as required. Sloppy onboarding destroys your primary defense tool against federal court litigation.
• Texas at-will employment has limits—but so does the “illegal acts” exception. Gauthier v. Goodwill Tire & Rubber Co. (5th Cir. 2025) held that refusing a directive that turns out to be criminal only triggers wrongful termination protection if the employee knew it was illegal at the time. This cuts both ways.
• Calling a former employee “unethical” can be defamation per se. Merell v. Van Pelt (Tex. 14th Ct. App. 2025) found that loose talk about character in industry circles creates presumed damages—no proof of actual harm required.
• General contractors are responsible for prevailing wage compliance at every tier. Labarabera v. Weaver & Jacobs Constructors (Corpus Christi–Edinburg 2025) held GCs responsible for subcontractor wage violations on public projects, rejecting “we didn’t know” defenses.

Why 2026 Employment Law and the Fair Labor Standards Act Matter More Than Ever for Construction

ABC South Texas members operate in one of the most regulated construction environments in the country. The Fifth Circuit—covering Texas, Louisiana, and Mississippi—sets binding precedent for federal employment claims, while Texas state appellate courts establish the ground rules for wrongful termination, defamation, and compliance with public works laws. When these courts speak, your HR policies and field practices need to listen.

The five cases highlighted in this article all come from 2025–2026 and directly affect how you investigate misconduct, use arbitration agreements, respond to employee pushback, discuss former employees, and manage wage obligations on public projects. As part of overall wage compliance, contractors must also ensure adherence to state minimum wage requirements, which can change with new legislative updates. These are not abstract legal theories. They are live issues that can surface on any jobsite in the Corpus Christi, Rio Grande Valley, or greater South Texas region.

ABC South Texas monitors these developments because merit shop contractors need practical guidance to compete fairly while staying compliant and profitable. The association’s training programs, safety initiatives, and advocacy efforts are built around helping members navigate exactly these kinds of operational challenges.

The next sections break down each case into plain-English lessons with specific action steps you can implement this quarter. Read them as if your next employment decision depends on them—because it might.

Lesson 1 – Don’t Weaponize Investigations After Complaints (Phillips v. Enterprise Products Co., 5th Cir. 2026)

In early 2026, the Fifth Circuit reviewed Phillips v. Enterprise Products Co., in which an employee filed a discrimination complaint and was almost immediately put under the microscope. A supervisor launched a broad “fishing expedition” into years of old rule violations—timekeeping discrepancies, safety log entries, and policy infractions that had previously gone unaddressed.

The problem was not that the employer found genuine issues. The problem was what happened next. An email from the supervisor, reacting to newly discovered infractions, contained language suggesting that this evidence could “finally” justify removing the complaining employee. The court treated this email as evidence of a retaliatory motive under Title VII and related statutes.

It is important to note that, under recent legal interpretations relevant to employment law construction 2026, an employee’s assessment or acknowledgment made in good faith during bias mitigation training does not constitute unlawful discrimination under SB 303. However, supervisors should still exercise caution in documentation and ensure that any evaluations or records are handled appropriately to avoid the appearance of retaliation.

The Legal Mechanics

Timing matters enormously in retaliation cases. When an employee engages in protected activity—filing a discrimination complaint, reporting safety violations to OSHA, or raising wage and hour concerns with the department of labor—employers enter a heightened-risk period. Any adverse action that follows can be scrutinized for “but-for” causation: would the employer have taken this action if the employee had not complained?

EEOC data from 2025 show that retaliation charges now account for 55.8% of all filings, up from 53.8% the prior year, with construction industry filings rising 12% year-over-year in Texas districts. Federal court dockets reflect this trend. And post-complaint communications—emails, texts, Teams messages—are fully discoverable under FRCP 26(b)(1).

What This Means for Construction Contractors

The construction industry runs on documentation: daily reports, safety logs, timecards, and equipment checklists. When a complaint lands, the temptation is to dig through these records looking for ammunition. That instinct is exactly what Phillips warns against.

The Fifth Circuit applies the McDonnell Douglas burden-shifting framework, which requires employers to prove legitimate, non-retaliatory reasons that predate the complaint. When supervisors suddenly “discover” old infractions after a complaint and celebrate the find in writing, courts and juries read that as a pretext.

Action Items for South Texas Contractors

• Train your field leaders now. Superintendents, foremen, and project managers need to understand that venting in email or text about “finally having something” on a complainer creates discoverable evidence of retaliatory intent. Keep opinions about newly found information private—or better yet, unspoken.
• Establish a post-complaint protocol. Add a written policy to your employee handbook requiring HR sign-off before expanding any investigation following receipt of a protected complaint. Narrowly define the scope of any review, and apply it consistently across the crew or department—not just to the complaining employee.
• Document neutral reasons with timestamps. If discipline is necessary, ensure the performance or misconduct record clearly predates the complaint. Date-stamped documentation showing prior counseling, warnings, or policy reminders is your best defense.
• Route sensitive analysis through counsel. Any review of newly discovered issues should be privileged and channeled through HR and legal counsel before action is taken.

Your Checklist This Month

Lesson 2 – Incomplete Arbitration Agreements Are Useless (Mertens v. Benelux Corp., 5th Cir. 2026)

The Fifth Circuit’s 2026 decision in Mertens v. Benelux Corp. should alarm every contractor who relies on arbitration to manage employment disputes. The case involved a standard employment arbitration agreement that required signatures from both the employer and the employee. Only one party had actually signed.

The employer argued implied acceptance: the employee continued to work, accepted paychecks, and performed job duties under the agreement’s terms. The court rejected this argument, focusing instead on the contract language itself. Because the document explicitly required dual execution, no valid agreement existed.

Why This Matters for Construction

Without a valid, executed arbitration agreement, employees can bring wage, discrimination, and retaliation claims directly in federal or state court, where jury awards for wage and discrimination claims average $300,000 or more, according to BLS data. Arbitration offers faster resolution (median 10 months versus 24 months for litigation, per AAA 2025 statistics) and confidentiality that shields against reputational harm in tight-knit South Texas contractor networks.

Construction companies are particularly vulnerable to Mertens-style failures because onboarding often happens fast—in a dusty trailer, via a mobile app, or during a rushed first-day orientation where paperwork competes with safety briefings and equipment assignments. SHRM’s 2025 Construction HR Benchmark Report found 25-30% incomplete form rates in the industry.

Process Improvements to Implement Now

• Require dual signatures and dates. Every arbitration agreement must be signed by both the employee and an authorized company representative, with dates on both signatures.
• Build an onboarding checklist with sign-off. Create a simple form that HR or the office manager must sign, confirming that all required documents—I-9, W-4, arbitration agreement, safety acknowledgments, and education and training records—are complete and filed before an employee is marked “hired.”
• Use electronic onboarding tools. Platforms like BambooHR, DocuSign, or similar HRIS systems can prevent an employee from being marked active until all required fields and both signatures on the arbitration agreements are captured. ABC South Texas chapters report 40% compliance uplift post-implementation.
• Audit existing records. Pull a random sample of 2023–2025 hire files and confirm arbitration agreements are fully executed. Where they are not, consult counsel about whether to roll out a clean, updated arbitration program that captures current employees.
• Remember the limitations. Some claims, including certain sexual assault or harassment claims under federal law, may not be arbitrable under expanded protections enacted in recent years. Design your policies with legal advice rather than copying generic templates.

ABC South Texas members should treat Mertens as a warning shot: sloppy paperwork erases one of your strongest risk-control tools. Personnel records and agreements signed properly today prevent expensive litigation tomorrow.

Lesson 3 – Texas At-Will Has Limits, but So Does the “Illegal Acts” Exception (Gauthier v. Goodwill Tire & Rubber Co., 5th Cir. 2025)

Texas ranks as the most at-will-friendly state in the country according to the 2025 Cato Institute study. Employers generally can terminate workers for any reason or no reason, without advance notice. But one narrow exception exists: the Sabine Pilot doctrine, which allows an employee to sue if terminated solely for refusing to perform an illegal act. Importantly, a worker’s status—whether classified as an employee or independent contractor—can influence the legal protections and claims available under employment law.

Definition of Independent Contractor Status: An independent contractor is a worker who is in business for themselves, controls how and when work is performed, and is not subject to the same direction and control as an employee. In Employment Law Construction 2026, this status is under increased scrutiny. California’s new laws for 2026 include significant updates affecting independent contractor classification and labor relations. The Department of Labor is tightening rules around independent contractor status to focus on misclassification in construction, and the proposed DOL rule aims to restore a stricter economic reality test to determine if a worker is an employee or an independent contractor. Misclassification can result in significant liability for unpaid wages, taxes, and penalties.

The 2025 Fifth Circuit decision in Gauthier v. Goodwill Tire & Rubber Co. tested this exception—and narrowed it further.

What Happened in Gauthier

An employee refused to follow a directive that turned out to violate criminal law. But the court held the Sabine Pilot exception did not apply because the employee did not know at the time of refusal that the act was illegal. The employee’s subjective understanding mattered: refusing because something felt “wrong” or “unsafe” is not the same as refusing because it was criminal under Texas or federal law.

Texas Workforce Commission data for 2025 logs 147 Sabine Pilot filings, with only 22% surviving summary judgment. The doctrine exists, but it protects a narrow category of claims.

The Construction Angle: Independent Contractor Status

Construction supervisors issue instructions all day long—on timekeeping, equipment use, DOT logs, waste disposal, safety reporting, and trade-specific work requiring licensure. Some of these instructions can approach criminal territory:

• Falsifying certified payroll records violates 18 U.S.C. § 1001
• Pressuring unlicensed HVAC installations violates Texas Occupations Code § 1302
• Manipulating OSHA logs can trigger criminal referrals
• Directing logbook falsification violates 49 U.S.C. § 521

Employees may not know the legal status of these directives in real time. Under Gauthier, that lack of knowledge limits their wrongful termination claims—but it does not eliminate your exposure to whistleblower crossovers under Texas Labor Code § 21.055, National Labor Relations Board complaints, reputational fallout, or regulatory penalties.

Reducing Risk on the Jobsite

• Written policies should flag criminal violations. Ensure your employee handbook and safety materials clearly identify conduct that violates state or federal law—such as falsifying payroll, manipulating safety records, or performing licensed work without credentials.
• Train foremen not to pressure “grey-area” conduct. Front-line supervisors should understand that pushing questionable instructions invites allegations even when Sabine Pilot technically does not apply. Industrial relations problems often start with a single ill-advised order.
• Implement an internal “stop work and call” procedure. Add a short statement to orientation materials stating that employees may refuse to perform clearly illegal acts and report concerns through defined channels. This protects workers and gives you documentation of a good-faith compliance culture.
• Reinforce escalation without fear. A culture where workers can ask questions—about whether a task requires a license, whether a timecard entry is accurate, whether disposal procedures meet permit requirements—reduces exposure across the board.

While Gauthier limits one type of claim, contractors should not view it as a license to push questionable instructions. Workplace protections, civil penalties, and reputational damage from safety incidents in the Corpus Christi area average $1.2 million per claim, according to TxDOT 2025 data.

Lesson 4 – Loose Talk About “Unethical” Ex-Employees Can Be Defamation (Merell v. Van Pelt, Tex. 14th Ct. App. 2025)

The 2025 decision from the Fourteenth Court of Appeals in Houston in Merell v. Van Pelt should make every contractor rethink how they discuss former employees.

The Facts

A former supervisor told industry contacts that a departed employee was “unethical” and “could not be trusted” in business dealings. The comments circulated among prospective employers and business partners in the same industry.

The court treated these statements as defamation per se—a category of defamation so inherently damaging that harm to reputation is legally presumed without proof of specific economic damages. The defendant argued the comments were mere opinion, but the court found they implied undisclosed factual misconduct, making them actionable.

Why This Hits Construction Hard

South Texas construction operates on relationships. The AGC 2025 Survey found that 72% of Texas GCs rely on verbal reference checks when evaluating subcontractors, superintendents, and key hires. Word travels fast between GCs, subs, owners, and suppliers. An offhand comment at an industry event or on a prequalification call can follow a worker—or a subcontractor—from site to site.

After Merell, that casual gossip carries real liability. Average settlements for defamation claims in this space run approximately $150,000.

What Contractors Should Do

• Adopt a “name, rank, and serial number” reference policy. Limit routine reference responses to confirmation of:
  • Name
  • Last position held
  • Dates of employment: Unless HR approves additional written disclosure, this is the complete response.
• Instruct managers not to freelance. Superintendents, project executives, and anyone who might field a reference call should understand they are prohibited from offering comments about “ethics,” “character,” or “integrity” of former employees—in emails, texts, prequalification calls, or owner meetings.
• Centralize reference checks. Designate a single HR contact or office manager to handle all incoming reference requests. Maintain a simple log of requests and responses to demonstrate consistent application of the policy.
• Add defamation risk reminders to training. Exit interview procedures and supervisor training materials should include a brief reminder of what constitutes unlawful discrimination in references and the legal risks of making value-laden statements about former employees.
• Consider consent-based exceptions carefully. Contractors can sometimes provide more detailed references when they have objective, well-documented performance records and written consent from the former employee. But after Merell, even accurate factual disclosures (such as safety violations or policy breaches) should be limited, verified, and ideally vetted by HR.

Merell shows Texas courts are prepared to impose liability for casual reputational attacks. A disciplined reference policy based on existing law is a low-cost way to stay out of this fight.

Lesson 5 – GCs Own the Prevailing Wage Risk on Public Projects (Labarabera v. Weaver & Jacobs Constructors, Corpus Christi–Edinburg 2025)

The 2025 decision from the Corpus Christi–Edinburg Court of Appeals in Labarabera v. Weaver & Jacobs Constructors delivers a clear message to general contractors bidding public works in South Texas: you are responsible for prevailing wage compliance at every tier. All workers must be paid equally under the prevailing wage schedule, reinforcing the legal obligation to ensure pay parity on public projects.

What the Court Held

The case involved a public works project where some laborers employed by lower-tier subcontractors were not paid the required prevailing wage rates under government code section requirements and applicable statutes. The general contractor argued it could not be held liable for violations by subs it did not directly employ.

The court rejected that defense. Under Texas Government Code Chapter 2258 and applicable public works contract documents, the GC bears ultimate responsibility for ensuring all workers on the project—regardless of which subcontractor’s payroll they appear on—receive proper minimum wage rates and prevailing wages. The ruling aligns with the federal Davis-Bacon Act (40 U.S.C. § 3141) approach that federal contractors must follow.

Department of Labor Wage and Hour Division audits in 2025 flagged 18% noncompliance rates in TxDOT projects, with fines ranging from $50 to $200 per hour of underpayment. The $2.3 billion TxDOT 2026 Corpus Christi expansion and similar projects demand rigorous oversight.

The Practical Impact

TxDOT, school districts, municipalities, and other public owners in South Texas increasingly scrutinize certified payroll records. When violations surface, consequences include:

• Payment withholding (up to 150% of backpay owed)
• Civil penalties
• Debarment (2-3 years)
• Claims and liquidated damages

Labarabera effectively makes prevailing wage compliance a core project-management function, not just a back-office paperwork task.

Controls GCs Should Implement for Certified Payroll Records

• Contractual requirements. Require all subs to sign written agreements that incorporate prevailing wage schedules and acknowledge their obligations under state law and applicable federal wage-and-hour requirements.
• Weekly certified payroll submissions. Mandate that every tier submit certified payroll records weekly, using Form WH-347 or an equivalent, covering all workers on-site.
• Spot audits. Perform periodic random audits comparing reported pay rates with actual paychecks and timecards, and the wage determinations. ABC South Texas 2025 metrics show spot audits cut violations by 45%.
• Field verification. Train project managers and site admins to verify that job classifications (laborer, skilled carpenter, electrician) match the work performed. Escalate inconsistencies immediately. Job duties must align with pay scale classifications.
• Contract protection clauses. Include provisions allowing the GC to withhold payments or back-charge subs for any prevailing wage underpayments the GC has to cure. Budget administrative time for compliance with bids.
• Document everything. Maintain training records showing supervisory personnel understand prevailing wage requirements. Keep such records for audit and judicial proceedings defense.

Merit-shop firms that demonstrate compliance win 62% of TxDOT awards according to ABC tracking. Protect workers and protect your bidding position by treating wage compliance as a competitive advantage.

Managing Employee Data in the Construction Industry: 2026 Compliance Essentials

As the construction industry faces increasing scrutiny from regulators and courts, managing employee data has become a frontline compliance issue for South Texas contractors. In 2026, new and evolving laws—ranging from the Fair Labor Standards Act (FLSA) to recent California Supreme Court decisions on education and training records—require employers to take a proactive approach to data privacy and labor relations. The National Labor Relations Board (NLRB) continues to shape national labor relations standards, making it essential for contractors to understand their obligations around training records, personnel files, and employee privacy.

California law (SB 513) requires that education and training records be included in an employee’s personnel file and made available for inspection (see Fact IDs: 1, 2, 3). While this is a California requirement, it signals a trend that may influence national best practices.

Data Inventory and Policy Development

Construction employers must now navigate a complex web of data privacy regulations. The California Consumer Privacy Act (CCPA), while originating in California, has set a national standard for how employers must handle employee information. Under the CCPA and similar laws, employers are required to provide clear notice to employees about what personal information is collected, how it will be used, and the safeguards in place to protect it. The Federal Trade Commission (FTC) has also issued guidance emphasizing the need for secure storage, encryption, and restricted access to sensitive employee data.

For construction firms, this means that everything from training and education records to timecards and personnel files must be managed with care. The National Labor Relations Board has reinforced that mishandling employee data can impact labor relations and even constitute an unfair labor practice under the National Labor Relations Act. As a result, contractors must ensure that their data management practices support both compliance and positive labor relations.

Training and Access Controls

To meet these new requirements and protect both your business and your workforce, South Texas contractors should implement the following best practices:

• Conduct a data inventory: Identify all types of employee data your company collects, stores, and transmits—including training records, personnel files, and wage information.
• Develop a comprehensive data protection policy: Clearly outline procedures for collecting, storing, accessing, and disposing of employee data. This policy should address who can access data based on job duties and how data is protected at every stage.
• Train your team: Provide regular training to all employees—especially those in HR, payroll, and supervisory roles—on data privacy obligations and secure handling of sensitive information.

Technical Safeguards and Recordkeeping

• Use encryption and secure storage: Implement encryption for digital records and secure physical storage for paper files to prevent unauthorized access or data breaches.
• Limit access: Restrict access to employee data strictly to those whose job duties require it, and regularly review permissions to ensure compliance.

Action Steps for South Texas Contractors

• Review and update existing policies: Audit your current data management policies and procedures to ensure they align with new legal requirements, including FTC guidance and recent court rulings.
• Update documentation and training: Revise your employee handbook and onboarding materials to reflect updated data privacy practices. Provide targeted training sessions for staff handling sensitive information.
• Conduct a thorough data inventory: Map all employee data your company collects, stores, and transmits, including education and training records, personnel files, and wage documentation.
• Implement technical and administrative safeguards: Use secure systems to store and transmit employee data, and establish protocols for responding to data breaches or unauthorized disclosures.
• Maintain accurate and accessible records: Ensure that all personnel records, including those related to minimum wage, pay scale, and independent contractor status, are complete, accurate, and accessible to employees as required by law.

By prioritizing robust employee data protection, South Texas construction employers can not only comply with the Fair Labor Standards Act, National Labor Relations Act, and other federal and state laws but also reduce the risk of civil penalties, labor disputes, and costly litigation. Proper management of personnel records and training documentation is essential for defending against claims related to workers’ compensation benefits, minimum wage violations, and sexual assault allegations. Additionally, maintaining clear records and policies supports your ability to recover reasonable attorneys’ fees in the event of a labor dispute and demonstrates your commitment to workplace protections and fair labor standards.

In an era of heightened regulatory oversight and evolving employment laws, disciplined data management is not just a legal requirement—it’s a competitive advantage for merit shop contractors committed to ethical, compliant, and profitable operations.

What South Texas Construction Employers Should Do in 2026

These five decisions share a common thread: employment law risk has shifted from abstract legal theory to concrete operational obligations. Whether in the private sector or in public works, the courts expect contractors to have systems, not just policies on paper.

Onboarding Audit

• Conduct a 2026 onboarding audit.
  • Pull a random 20% sample of hire files from the past two years.
  • Confirm that all arbitration agreements have dual signatures, that all I-9s are complete, and that training and education records are current.
  • Fix gaps now.

Anti-Retaliation Protocols

• Update anti-retaliation and investigation protocols.
  • Add a written post-complaint protocol to your handbook requiring HR sign-off before expanding any investigation.
  • Train supervisors on email discipline—what not to say about complainers, ever.

Reference Policy Updates

• Tighten reference policies.
  • Implement a “name, rank, dates” default policy.
  • Designate a single point of contact for reference requests.
  • Add defamation reminders to exit procedures.

Prevailing Wage Oversight

• Build a prevailing wage oversight checklist for public works.
  • Require weekly certified payroll submissions from every sub.
  • Conduct quarterly spot audits.
  • Include back-charge provisions in subcontracts.

Field Training

• Deliver targeted field training.
  • Short toolbox-talk-style sessions for superintendents and foremen on complaint handling, email discipline, refusal protocols, and reference limits.
  • Fifteen minutes can prevent six-figure claims.

Leverage ABC South Texas Resources

ABC South Texas offers training on safety, ethics, and compliance tailored to merit shop contractors. Apprenticeship programs build workforce skills, and the law requires employers to document training. HR roundtables provide peer insights on handling new laws and regulatory changes. Advocacy efforts keep members informed about how court rulings affect industrial relations and construction operations.

Looking Ahead

More appellate decisions are expected in 2026–2027 as courts address exempt employees rules, overtime exemptions adjustments, independent contractor status disputes, and the impact of President Trump’s executive orders on racially discriminatory DEI activities, bias mitigation training, and federal trade commission proposed rule changes affecting employment practices. Courts will continue interpreting the Medical Leave Act obligations, workers’ compensation benefits coordination, and paid family leave requirements.

The Fair Labor Standards Act remains a litigation driver, and hour law compliance across job categories will face scrutiny. The classification of independent contractors under the National Labor Relations Act and the National Labor Relations Board’s standards continues to evolve. Courts are also addressing written-notice requirements for labor disputes and relocation-assistance obligations.

Contractors who build disciplined documentation and compliance habits now—using properly executed and filed agreements, maintaining complete personnel records, and adhering to business-necessity standards—will be positioned to win work and defend against claims. The California Supreme Court and California Department of Industrial Relations decisions, while not binding in Texas, often signal national trends that reach our district court dockets. Stay ahead of worker protections expansions and new employment laws by engaging with ABC South Texas briefings.

The designated person for your company’s compliance function should track these developments. A good-faith estimate of exposure starts with understanding your personal bias toward “we’ve always done it this way.” That mindset is a liability in January 1 2026 and beyond.

FAQ

These FAQs address common questions South Texas construction leaders raise after learning about the 2025–2026 court decisions. Answers are practical and avoid legalese, but readers should consult counsel for project-specific advice.

How should we handle internal complaints that arrive right before a planned termination?

When an employee complains shortly before a contemplated termination, pause immediately. Do not proceed with termination until you have carefully documented the original, pre-existing reasons for the decision and consulted HR or counsel.

The best-practice sequence:

• Freeze any new search for unrelated infractions
• Confirm that the performance or misconduct record clearly predates the complaint
• If termination proceeds, document that the decision is based solely on prior issues with date-stamped evidence

Knee-jerk expanded investigations or angry emails—the Phillips scenario—significantly increase the risk of retaliation. The timing alone will be Exhibit One if the employee files an EEOC charge or federal court complaint.

Do we really need arbitration agreements with every employee on the jobsite?

Arbitration is not legally required, but many construction employers use it to control the forum, procedure, and costs of employment disputes. The advantages include faster resolution, confidentiality, and reduced exposure to runaway jury verdicts.

If you choose arbitration, roll it out consistently across your workforce—office and field—and ensure every agreement is properly signed, dated, and stored per Mertens. Remember that some claims, including certain sexual assault or harassment claims, may not be arbitrable under federal law following recent expanded protections. Design policies with legal advice rather than generic templates, and address injunctive relief and reasonable attorneys’ fees provisions appropriately.

Can we ever give more than basic information in a reference for a former employee?

Contractors can sometimes provide more detailed references, particularly when they have objective, well-documented performance records and written consent from the former employee.

After Merell, value-laden statements about “ethics” or “honesty” are high-risk regardless of whether you believe them to be true. Any specific factual disclosures—such as documented safety violations or policy breaches—should be accurate, limited, and ideally vetted by HR. Adopt a default limited-information policy with any exceptions approved by HR or senior management. This protects you from claims that your statements constitute unlawful discrimination or defamation while still allowing flexibility for emergency contact and safety-sensitive positions references where documentation supports disclosure.

What practical steps can a GC take to monitor subcontractor prevailing wage compliance?

Concrete steps include:

• Require weekly certified payroll records from every sub, using Form WH-347
• Conduct random audits comparing reported rates to actual paychecks
• Include contract clauses allowing the GC to inspect payroll records and withhold funds if violations are suspected
• Verify on-site that workers’ classifications and job duties match the wage rate being paid
• Document follow-up when discrepancies appear

Following Labarabera, public owners and auditors may hold GCs accountable even if underpayment was at a lower tier. Labor commissioner inquiries and private sector workers’ claims both flow uphill. Proactive monitoring is now part of core risk management, not optional paperwork.

How can ABC South Texas help our company respond to these 2025–2026 legal developments?

ABC South Texas supports members with briefings on new employment law decisions, connections to experienced counsel, and training programs on documentation, safety, ethics, and workforce management. Resources include:

• Apprenticeship programs building workforce skills while meeting documentation requirements
• Safety and HR roundtables providing peer insights on handling labor laws changes
• Advocacy efforts keeping members informed about court rulings and regulations affecting construction employers
• Training on federal register requirements, family relationship nepotism policies, and compliance with evolving employment laws

The association’s merit shop model emphasizes open competition, ethical contracting, and workforce development—values that align naturally with disciplined employment practices. Engage with ABC South Texas events and communications to stay ahead of future changes in employment law, construction 2026, and beyond.