On December 12, 2014, the NLRB announced that its final rules on the “Quickie” Election will be published on December 15, 2014, and will take effect April 15, 2015. The most significant impact of the new rules will be to shorten the time from election for union representation from approximately 40 days to 10 to 14 days.
The NLRB’s press release stated that the rules are aimed at streamlining and speeding up union-organizing elections. A few significant aspects of the final rule include:
- Employers must provide the names and contact information about employees immediately upon the filing of a petition;
- Employers must voice objections to the petition within a few days, or face the threat of waiver;
- Employers may no longer seek pre-election review of Regional Office decisions;
- Election petitions may be electronically filed.
The NLRB’s Fact Sheet contains additional information about the final election rules.
Take Away: The NLRB’s new election rules will have a significant impact on how employers respond to union organizing attempts. Most importantly, employer responses will have to be quick.
The Kiewit-Turner joint venture created to build the VA’s hospital near Denver stopped work on December 10 after the Civilian Board of Contract Appeals ruled that the VA breached the contract. Kiewit-Turner claims that the VA owes it over $100 million on the project. And, given the appeals board’s recent ruling entirely against the VA, the claim may get some traction.
This project has been plagued with problems from the beginning. One strange aspect of the project is the VA’s apparent unwillingness to incorporate value engineering or require the architects to redesign the project to fit within the budget. The latest budget was $582M, while the latest projections show that the project will cost more than $1 billion to complete.
In addition to serious budget overruns, the project is substantially delayed. The project was originally intended to open in May, 2015. That date has been pushed back to 2017, and given the recent shut-down, that date will likely be pushed back even later.
Kiewit-Turner must be applauded for the way it handled this situation. Instead of simply walking off the job, Kiewit-Turner continued to work, under protest, and asked the contracting officer to determine that the VA breached the contract by failing to provide a design that could be built within budget. The contracting officer ruled that the VA had not breached the contract and directed Kiewit-Turner to continue with the work.
While continuing the work, Kiewit-Turner appealed to Civilian Board of Contract Appeals. After an 8 day hearing, the appellate court ruled in Kiewit-Turner’s favor on all counts, finding that the VA had breached the contract and Kiewit-Turner was entitled to stop work on the project.
Of course, this is just the first step in what will likely be a very long process to figure out how the work will continue and how much Kiewit-Turner must be paid for the work it performed.
Last September, OSHA announced its final rules for reporting severe injuries and fatalities. The new rules take effect on January 1, 2015. Are you ready?
The New Rule Requirements
- OSHA’s severe injury and fatality reporting requirements apply to all employers covered by OSHA, not just those with 10 or more employees.
- All employee work-related fatalities must be reported within 8 hours of the death. The previous rule required reporting only when 3 or more employees suffered a work related fatality.
- Employers must report when an employee is hospitalized, suffers an amputation or loses an eye in a work related injury. These reports must be made within 24 hours of the incident.
- Reports may be made by telephone to the OSHA Area Office, to the OSHA toll-free number or electronic submission on OSHA’s website.
The new rules will require more immediate reporting, which will also allow for more immediate investigation. Now is a good time to review your OSHA policies and programs to make sure they are up to date.
Authored by Craig Martin, Lamson Dugan and Murray.
Construction Insurance Coverage
Ah, the age old question, What does my insurance really cover? A federal court in Georgia recently weighed in on this issue in Standard Contractors, Inc. v. National Trust Insurance Company, and ruled that a contractor’s commercial general liability insurer did not have to pay for damage caused by a subcontractor.
Standard Contractors was hired to renovate the pool on an army base. Standard hired a subcontractor to for design and installation work. The subcontractor’s work was subpar in that the subcontractor omitted a number of parts, installed the wrong parts, and caused more than $400,000 in damage to the pool. Standard submitted a claim to its insurer seeking coverage for the loss under its commercial general liability policy.
The insurer investigated the claim and determined that there was no coverage for the claim. Standard filed suit against the insurer, alleging breach of the insurance contract and bad faith.
The court analyzed the policy and generally found that the insurer was generally obligated to pay for damages caused by the contractor’s faulty workmanship. But, the policy exempted from coverage:
Any liability for property damage to your work if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.
The court concluded that because Standard claim was based on the subcontractor’s negligent performance of its work on the pool, the exclusion applied and the insurer was not obligated to cover Standard’s claim.
Take away: What exclusions and exemptions does your insurance policy contain? Do you have insurance coverage for your subcontractor’s work?
Authored by Craig Martin, Lamson Dugan and Murray.
Late last month, President Obama issued a number of Executive Orders on immigration policy. One main point of the President’s action grants work permits to millions of immigrants who were ineligible for lawful status. If one of your employee’s qualifies for this program, called Deferred Action, you may have to update employee I-9s.
The executive order allows qualifying immigrants to remain in the U.S. It also allows individuals to apply for a work permit, which can lead to a social security card. To qualify for the Deferred Action program, the applicant must meet the following criteria:
- Present in the U.S. from January 1, 2010 through November 20, 2014;
- The parent of a U.S. citizen or lawful permanent resident who was born before November 20, 2014.
- No conviction of a felony, significant misdemeanor, or three or more other misdemeanors.
Many undocumented workers may be eligible for the Deferred Action program, which may lead to a work permit. If they do receive work permits, they can then go to the Social Security Administration and apply for social security numbers.
Armed with a new social security number, employees may request to update their I-9 form with their actual name and newly issued social security number.
Employers confronted with this situation should review both the new documentation and the old I-9 to determine whether a new I-9 must be completed or simply re-verify the I-9. If the employee’s name, address, date of birth, or social security number is now different than the information in section 1 of the previously completed I-9, the employer should complete a new I-9, write in the original hire date in section 2 and attached the new I-9 to the previously completed I-9. If you participate in E-Verify, you should verify the new I-9 information through E-Verify.
If the information in section 1 has not changed and the employee simply presents a new employment authorization document, the employer should complete section 3 and make a copy of the new employment authorization document. The employer should not conduct a new E-Verify check.
It will be several months before President Obama’s Executive Orders are scheduled to go into effect, and it’s far from clear whether they ever will be.
Take Away: If employees present new work authorization documentation, review your I-9 and make the changes or complete a new one as set forth above.
I hope you all have a wonderful holiday and have a moment reflect on all the wonderful experiences over the last year for which we can all be thankful.
I’d also like to thank you all for reading this blog. I truly appreciate your interest, sharing, and comments over the past year. If you ever have an idea or a question you’d like me to write about, please let me know.
Risks on Construction Projects
The latest Engineering News Record had an interesting article on Best Practices in Construction written by Deron Cowan of Zurich Services Corporation. In the articles, Mr. Cowan emphasizes the importance of best practices and the methodology to develop them.
As Mr. Cowan notes, best practices are intended to eliminate, reduce and manage risks and all construction companies should be fully engaged in correctly executing and accomplishing risk analysis to meet the demands of their practices.
Mr. Cowan sets forth the process to assess and implement risk management:
- The problem situation must be identified and then analyzed.
- When the analysis is complete, it leads to determining a potential solution.
- The solution is then communicated and implemented to the workforce.
- Follow-up on the best practice to determine whether it was beneficial.
By following a protocol to identify risks and best practices to avoid them, construction companies can reduce the probability and severity of accidents in the workplace.
Authored by Craig Martin, Lamson Dugan and Murray.
Help Wanted in Construction Industry
Over 1,000 contractors participated in Associated General Contractors’ (“AGC”) survey asking whether they were facing a labor shortage. AGC crunched the numbers and provided an Analysis of its survey.
The survey revealed that 83% of construction firms were having trouble finding qualified workers. This survey certainly confirmed comments from construction firms in and around Omaha.
AGC also provided a regional analysis and below are some of the highlights for the Midwestern region.
- 30% of employers reported having a hard time filing all key professional and craft worker positions.
- 71% of employers reported trouble filling carpenter position; 66% reported trouble finding equipment operators; 60% reported trouble finding plumbers; and 59% reported finding cement masons.
- 55% have increased pay and/or benefits to retain and/or recruit construction craft workers.
Take Away: As the construction industry continues to recover from the recession, qualified employees will likely be in shorter supply and demand increased compensation.
The Department of Labor’s regulations can impact your construction project.
The Department of Labor issued its final regulations to implement President Obama’s Executive Order raising the minimum wage to $10.10 per hour for workers on federal construction projects. The new minimum wage will not be effective until January 1, 2015, and will apply to most workers and most federal projects.
Executive Order 13658 applies to four major categories of contractual agreements:
- procurement contracts for construction covered by the Davis-Bacon Act (DBA) that exceed $2,000;
- service contracts covered by the Service Contract Act (SCA) that exceed $2,500;
- concessions contracts, including any concessions contract excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b); and
- contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.
The final rule contains certain narrow exclusions from coverage for the following types of contractual agreements:
- contracts and agreements with and grants to Indian Tribes under Public Law 93-638, as amended;
- any procurement contracts for construction that are not subject to the DBA (i.e., procurement contracts for construction under $2,000); and
- any contracts for services, except for those otherwise expressly covered by the final rule, that are exempted from coverage under the SCA or its implementing regulations.
The new minimum wage will not apply to certain workers, including:
- Apprentices, and messengers;
- Full-time Students; and
- Exempt employees under the FLSA, those working in a bona fide executive, administrative, or professional capacity
Take Away: The regulations implementing President Obama’s Executive Order exceed 250 pages. The Department of Labor published a Fact Sheet that summarizes the rules. But, given the very low contract values and limited exclusions, it is likely that this rule will apply to your workers engaged on federal contracts.
Construction insurance coverage can be confusing and counsel may be necessary to review coverage decisions.
The ever changing landscape of insurance coverage for contractors continues to be clarified in Texas. The Fifth Circuit Court of Appeals applied Texas law in Crownover v. Mid-Continent Casualty Company, concluding that contractors do have insurance coverage to cover claims that a project was not constructed in a good and workmanlike manner.
In this case, the Crownovers hired a contractor to build a house. The contract contained a warranty-to-repair clause. Shortly after construction was completed, cracks began to appear in the walls and foundation, and there were problems with the heating and air conditioning system. The Crownovers demanded that the contractor repair the problems and the contractor refused. The Crownovers brought an arbitration proceeding against the contractor and prevailed, obtaining a judgment that the contractor must pay for repairs to the foundation and HVAC system. The contractor then filed for bankruptcy and the bankruptcy court allowed the Crownovers to pursue their claim against the contractor’s insurer.
The Crownovers sued the contractor’s insurer and the insurer took the position the comprehensive general liability (“CGL”) policy did not cover the Crownovers’ claim because any liability of the contractor was based on the contract with the Crownovers and thus the contractual-liability exclusion applied. The trial court agreed and the Crownovers appealed to the Fifth Circuit Court of Appeals.
The Fifth Circuit Court of Appeals initially decided the case in June, affirming the trial court’s decision. The Crownovers asked the court to look at the issue again, and the court reversed itself this past October.
In ruling in favor of the Crownovers, the court found that the contractual-liability exclusion applied only in those instances where the contractor assumed additional responsibilities beyond those found at common law. Because common law establishes a duty for contractors to repair work that was not carried out in a good and workmanlike manner, the contractual-liability exclusion did not apply.
Take Away: CGL policies may very well provide coverage for faulty work. But, each state’s laws will control how the insurance policy is interpreted and whether coverage will be found.