In construction, success isn’t just measured by the final build – it’s measured by how you get there. At the American Institute of Constructors (AIC), we’re committed to helping the next generation of construction professionals rise to meet the ethical and legal responsibilities in construction that define our field.

Whether you’re managing large-scale construction projects or overseeing daily operations on a construction site, your decisions affect more than just timelines and budgets. They impact public trust, team safety, and the reputation of the construction firm you represent.

Learn about the most important ethical issues and legal obligations in our industry. You’ll be better prepared to lead with integrity, avoid risk, and drive successful construction outcomes.

Ethical Responsibilities: Doing the Right Thing on Every Site

Ethical behavior is the backbone of professional credibility in construction work. It’s not just about what’s legal – it’s about doing what’s right, especially when no one’s watching.

AIC Code of Ethics: Your Guiding Principles

The AIC Code of Ethics lays out clear expectations for everyone involved in construction works. Consider the core elements of our Code that should drive decision-making at the job site:

• Have full regard for the public interest because your work impacts public safety.
• Avoid deceptive practices and never seek unfair advantages on the job.
• Protect others’ reputations by acting with professionalism and respect.
• Give fair, unbiased advice that helps clients make smart, informed decisions.
• Maintain confidentiality of all sensitive or proprietary project information.
• Follow current professional and industry standards in all aspects of your work.
• Stay up to date with evolving technology, materials, and methods by supporting continuing education.

These values are essential for building trust across your team, your clients, and the community.

Real-World Ethical Issues in Construction

Ethical missteps may seem like shortcuts, but they often lead to bigger problems. Some examples of ethical issues for constructors to watch for in the industry include the following:

• Front-end loading: Overvaluing early line items in a project to improve contractor cash flow may seem helpful in the short term, but it’s considered unethical and damages trust.
• Bid shopping and bid peddling: Pressuring subcontractors to undercut each other by revealing competitor bids isn’t just unethical; it’s illegal in some states.
• Over-promising mock-ups: A polished sample that can’t be replicated in the field sets false expectations for the owner and designer.
• Defective work: Cutting corners on quality can lead to rework, claims, and even safety hazards. Every element of a project must meet building codes, safety standards, and the original design intent.

Choosing the ethical path may be difficult in the short term, but in the long run, it will protect your company, your team, and your project’s long-term success. You’ll also help minimize your company’s exposure to legal issues.

Legal Responsibilities: Know the Law, Avoid the Risk

Ethics guide your judgment. Laws define your obligations. Knowing both will help you avoid costly mistakes and ensure every project complies with applicable federal, state, and local laws and regulations.

Understanding Contracts in Construction

One of the most critical legal issues in construction relates to contracts. Construction contracts are legally binding and structured to outline all roles, risks, and responsibilities. A valid contract includes:

• Mutual agreement (offer + acceptance).
• Capacity (legal authority to enter into a contract).
• Consideration (value exchanged).
• Lawful object (the purpose of the contract).

Even the most carefully-worded contracts can lead to disagreements. Always apply these five principles of contract interpretation to understand your specific role in the agreement:

1. Read the contract as a whole.
2. Resolve ambiguities against the drafter.
3. Let contract terms override prior discussions.
4. Give priority to specific clauses.
5. Interpret in the context of construction work norms.

Safety: OSHA and Workplace Responsibility

Nothing is more important than keeping your construction site safe. That’s where OSHA compliance comes into play. You’ll need to understand these key elements of OSHA compliance at the construction site:

• Recordkeeping: Complete the required documentation for employers with 10+ full-time employees (Forms 300, 300-A, 301).
• Postings: Display “It’s the Law!” posters and citations where all workers can see them.
• Hazard communication: Provide up-to-date Safety Data Sheets (SDS) for all materials used at the job site and host regularly-scheduled training sessions with workers.
• Competent Person: Assign someone trained and responsible for identifying and correcting hazards.

Establishing safety policies and procedures can help mitigate risk and subsequent legal issues. These policies can help address common OSHA issues on construction sites:

• Lack of fall protection (one of OSHA’s “Focus Four” leading causes of serious injuries).
• Improper use of ladders and scaffolding.
• Electrical safety violations.
• Unsafe trenching and excavation practices.
• Failure to use required PPE.

Following OSHA rules doesn’t just ensure the safety of your team. It also helps reduce liability and keeps your construction company operating within the law.

Employment and Labor Laws

One of the most prevalent ethical dilemmas in construction right now is the classification of workers at the job site. If your construction firm hires, trains, and manages workers, you’re subject to labor regulations, including:

• Fair Labor Standards Act (FLSA): Covers minimum wage, overtime, and youth employment.
• Independent contractor vs. employee: Defines whether an employee should be paid as a 1099 contractor or a W-2 employee.

Ignoring these rules creates business risk that can cost your company time, money, and credibility. If you’re not sure whether your company is playing by the rules, consult with your company’s HR leaders and legal team to stay on the right side of labor laws.

Insurance, Bonds, and Legal Protections

As a construction manager, you’re responsible for ensuring your company has the proper protections in place before any work begins. Ask questions, get information, and be ready to safeguard your projects. Verify that your company has these documents in place:

• Insurance: Includes Workers’ Comp, Builder’s Risk, General Liability, and Errors & Omissions.
• Bonds: Protect clients and subs with Bid Bonds, Performance Bonds, and Payment Bonds.
• Subcontractor Default Insurance (SDI): An alternative that shifts financial responsibility back onto subcontractors.

All of these measures help your construction firm manage risk, fulfill contracts, and operate responsibly.

Navigating Claims, Disputes, and Payments

Disputes are part of the business, but they don’t have to derail the project. Common legal issues include:

• Delays caused by weather, slow decision-making, or differing site conditions.
• Disagreements over scope, costs, or project responsibilities.
• Delayed or withheld payments (retainage, “pay-when-paid” clauses).
• Procuring lower-quality materials at a lesser price than the project owner paid for.
• Change orders that do not explicitly state who is responsible for the cost.

Your company may resolve disputes through various means, including negotiation, mediation, arbitration (often required in the contract), and litigation (when all else fails). Be prepared to give an account for any actions you took as the construction manager.

Pro Tip: Have strong documentation of every detail and decision. Save emails, text messages, phone records, and other forms of communication that may come into play during a legal dispute.

Ethical and Legal Responsibilities in Construction Are the Foundation of Success

As a construction manager, your job is about more than managing materials, timelines, and crews. You’re a leader – one who must balance legal and ethical obligations with real-world demands. That’s what defines a professional in this industry.

If you want to lead in the construction industry, you need more than technical skills. You need the judgment, integrity, and knowledge to support legal and ethical practices that come with every project.

Understanding the ethical and legal responsibilities in construction helps you protect your people, your clients, and your company – while building structures that stand the test of time.

We are here to support you on this journey. Follow AIC on LinkedIn to read about the latest construction issues of our times. Gain information that will help you be a stronger leader and manager in your role!