Just as any construction project has many parts that must be effectively executed to achieve the end product, every construction company has many components that it must manage to ensure success. One of the more important ones is personnel/human resources. At the end of the day, all the nice equipment, financing, and contracts don’t mean much if there are no skilled trades and craftsmen on the ground to bring a project to life.
The world’s leading HR management organization, SHRM (Society for Resource Management) recently published a study that about 72 percent of employees across the nation said they work through lunch, while 70 percent reported working beyond a 40-hour workweek. Only 21 percent of the people polled cited pressure from supervisors as the reason for this. To the contrary, 52 percent claimed the extra work was because of "self-imposed pressure," while 44 percent cited "meeting project or performance goals."
Discussions about overtime and extra work may, on its face, seem a little out of place for a construction industry that has been hit hard financially in the last 18 months and seen plenty of layoffs. Recently, however, there have been trickles of encouraging economic news ("green sprouts," as Fed Chairman Ben Bernanke has called them), and we know that the industry will pick up at some point. The SHRM survey and the construction industry layoffs all beg the question of what will companies do when they face increased workloads with decreased workforces? Put another way, should you worry when employees start working that extra time to meet project and performance goals?
The Fair Labor Standards Act (29 U.S.C. 201, et seq.) is the starting point for many wage and pay claims. At its most basic level, the FLSA requires employers to pay a minimum wage to employees for each hour of work. As a general rule, all job-related activity or time is included in "hours worked," unless specifically excluded by the Act. Non-exempt employees generally are to be paid overtime at not less than 1½ times the regular rate for all work time in excess of 40 hours per week.
Sounds simple enough, right? It gets a little trickier. What all exactly is considered "hours worked"? What if the employee works extra time without approval? Is driving to a job site considered "hours worked"? What about down time waiting for other contractors to finish their portion of a project? Are employees still on the clock under these circumstances?
If an employee voluntarily works extra hours, that time is considered "hours worked" and must be compensated. The reason for the extra work is not important–what matters is whether the employer knew or had reason to know the employee was working extra.
Whether waiting time is "on the clock" is a more fact intensive issue–it is a question of whether the employee was engaged to wait or waiting to be engaged (generally speaking, engaged to wait = hours worked; waiting to be engaged...not typically hours worked).
If an employee is not able to effectively use waiting time for his own purposes, it generally belongs to and is controlled by the employer. Under this scenario, the employee is "engaged to wait." This is the case even if they are just chatting with co-workers, reading a book, or working a crossword puzzle. Periods of being engaged to wait are typically shorter in duration, and the waiting is an integral part of the job (imagine a truck driver waiting while his trailer is being unloaded).
Additionally, an employee who is required to remain on call on the employer's premises or so close that he cannot use the time effectively for his own purposes is working while "on call." An employee who is not required to remain on the employer's premises but is merely required to leave word at his home or with company officials where he may be reached is not working while on call.
Of the other side of the coin, periods during which an employee is completely relieved from duty and which are long enough to enable him to use the time effectively for his own purposes are not "hours worked."
An employee who travels from home before his regular workday and returns to his home at the end of the workday is engaged in ordinary home to work travel which is a normal incident of employment. This is true whether he works at a fixed location or at different job sites. Normal travel from home to work is not worktime.
However, time spent by an employee in travel as part of his principal activity, such as travel from job site to job site during the workday, must be counted as hours worked. Where an employee is required to report at a meeting place to receive instructions or to perform other work there, or to pick up and to carry tools, the travel from the designated place to the work place is part of the day's work, and must be counted as hours worked regardless of contract, custom, or practice. If an employee normally finishes his work on the premises at 5 p.m. and is sent to another job which he finishes at 8 p.m. and is required to return to his employer's premises arriving at 9 p.m., all of the time is working time. However, if the employee goes home instead of returning to his employer's premises, the travel after 8 p.m. is home-to-work travel and is not hours worked.
At some point, construction companies (and hence, construction workers) will be doing more work with fewer people because of recent downsizings. These examples are just a few of the situations that are commonly encountered in routine wage and hour determinations. It is important to get these matters right, because mistakes in this area can be very costly. Employees can bring an action for the compensation and overtime that they earned, and they are entitled to attorney’s fees. This is certainly one area where an ounce of prevention is much better than a pound of cure.
Tuesday, June 30, 2009
Tuesday, June 9, 2009
Legislative Wrap-Up: Anti-Indemnity Legislation Fails and Texas Residential Construction Commission To Expire
Another session of the Texas Legislature recently concluded and, as usual, there will be plenty for the political talking heads to chew on for a while. Among the thousands of bills that were proposed this year were a few that were of particular interest to the construction industry.
SB 555 (and its identical companion bill, HB 818) would have effectively eliminated indemnity and additional insured provisions in construction contracts. According to that proposed legislation, provisions in a construction contract would be void and unenforceable if they required an indemnitor to indemnify or defend another party (the "indemnitee") against a claim to the extent that the claim was caused by the negligence or fault of the indemnitee. An "additional insured" provision would also be void to the extent it requires insurance for this same scenario (the indemnitee’s own negligence).
This would have represented a major change in construction contracts, since this basic risk shifting so common in most construction contracts would be fundamentally altered. However, SB555 (and HB818) failed to pass. So the abolition of indemnity will be off the table for at least two years until the next legislative session.
How you felt about SB 555 (and HB 818) probably depended on the nature of your business. Subcontractors, who tended to be ones doing the indemnifying, were generally more supportive of the bill. Owners and developers, who typically benefitted from indemnification, were more opposed to it.
While the bill did not pass this session, it did have some support. And the concept is not a novel one. For example, Oregon has enacted an anti-indemnity statute (Oregon Revised Statute 30.140) similar to what was proposed in SB 555. It will be two years until the next legislative session in Texas, and a lot can happen in the political landscape between now and then (not to mention the construction industry). However, I would not be surprised if this issue comes up again and legislators make another effort at some form of anti-indemnity legislation.
A second issue that was being followed closely was the future of the Texas Residential Construction Commission. As I wrote about here, the Texas Residential Construction Commission ("TRCC") is set to expire later this year. Several lawmakers introduced a number of different bills that would call for various changes to the TRCC. Some called for the continuation of the TRCC but with changes to its procedures; some called for its outright abolition.
At the end of the day, however, nothing passed that would rescue or reform the TRCC. As a result, the Commission will naturally phase out in the months ahead. While the TRCC had some supporters, its detractors (which included most consumers and many builders) seemed to be more numerous and vocal, and it is doubtful the Commission will be missed by many.
This will definitely bring about a change in the legal landscape in the residential construction industry. Without the TRCC, parties are more on their own in their contractual negotiations, and the barriers to litigation will be lifted.
All in all, this legislative session ended like many before it–some things were accomplished while others didn’t quite get finished. And in two years, we’ll do it all over again.
SB 555 (and its identical companion bill, HB 818) would have effectively eliminated indemnity and additional insured provisions in construction contracts. According to that proposed legislation, provisions in a construction contract would be void and unenforceable if they required an indemnitor to indemnify or defend another party (the "indemnitee") against a claim to the extent that the claim was caused by the negligence or fault of the indemnitee. An "additional insured" provision would also be void to the extent it requires insurance for this same scenario (the indemnitee’s own negligence).
This would have represented a major change in construction contracts, since this basic risk shifting so common in most construction contracts would be fundamentally altered. However, SB555 (and HB818) failed to pass. So the abolition of indemnity will be off the table for at least two years until the next legislative session.
How you felt about SB 555 (and HB 818) probably depended on the nature of your business. Subcontractors, who tended to be ones doing the indemnifying, were generally more supportive of the bill. Owners and developers, who typically benefitted from indemnification, were more opposed to it.
While the bill did not pass this session, it did have some support. And the concept is not a novel one. For example, Oregon has enacted an anti-indemnity statute (Oregon Revised Statute 30.140) similar to what was proposed in SB 555. It will be two years until the next legislative session in Texas, and a lot can happen in the political landscape between now and then (not to mention the construction industry). However, I would not be surprised if this issue comes up again and legislators make another effort at some form of anti-indemnity legislation.
A second issue that was being followed closely was the future of the Texas Residential Construction Commission. As I wrote about here, the Texas Residential Construction Commission ("TRCC") is set to expire later this year. Several lawmakers introduced a number of different bills that would call for various changes to the TRCC. Some called for the continuation of the TRCC but with changes to its procedures; some called for its outright abolition.
At the end of the day, however, nothing passed that would rescue or reform the TRCC. As a result, the Commission will naturally phase out in the months ahead. While the TRCC had some supporters, its detractors (which included most consumers and many builders) seemed to be more numerous and vocal, and it is doubtful the Commission will be missed by many.
This will definitely bring about a change in the legal landscape in the residential construction industry. Without the TRCC, parties are more on their own in their contractual negotiations, and the barriers to litigation will be lifted.
All in all, this legislative session ended like many before it–some things were accomplished while others didn’t quite get finished. And in two years, we’ll do it all over again.
Monday, May 25, 2009
Hidden Land Mines: Identifying (and Managing) Risk in LEED/Green Building Projects
Anyone in the construction industry, particularly those involved in LEED/green building projects, has probably realized that it not a matter of "if" green building litigation will come, but "when" and "how." To date, green building litigation has been pretty infrequent, but anticipating where litigation will come from will be an important step in avoiding it.
One widespread school of thought has been that green building litigation will arise from projects that simply do not obtain the LEED requirements that are contracted for. Green or LEED-oriented buildings are much more costly to build than conventional buildings, and owners and developers pay a premium for this LEED branding. So they are clearly not going to be happy if a project does not obtain the certification that was expected. As with many construction defect or design defect cases, litigation may arise for breaches of contract or breaches of warranty.
However, this may not be the only theory of liability in the green building arena. A recent case out of Maryland, Shaw Development v. Southern Builders, suggests that the scope of potential liability may be broader.
The Shaw case arose in connection with a condo project in Maryland that included a number of green design features that were intended to support a LEED Silver application. The owner sued the general contractor seeking, among other things, over $600,000 in lost tax credits under a state green building program.
Maryland had provisions that provided tax credits to owners for building eco-friendly buildings. The procedure to receive this credit was to initially apply for a sort of preliminary certification of the project. The project would be built and then, when completed, it would be evaluated for final approval. The preliminary certification, however, contained an expiration date, and the condo project at issue in Shaw was not completed before that project’s preliminary certification expired.
The lawsuit in Shaw did not specify exactly how the general contractor was to be liable, and the case settled prior to trial so there is no precedential value either. However, it is quite possible that the design actually was adequate–the project was just not delivered in time to qualify for the tax credits.
So what is the lesson to be learned from Shaw? Actually, the key in all green building contracts, particularly ones that contemplate LEED certifications and/or green-based tax credits (or even service provider discounts, such as electricity) is to define and clarify risk and set out which party will be liable for certain failures. That means being sure your contract actually fits the project and isn’t just a blanket form (Note: the contract at issue in Shaw was an AIA form but clearly did not address these issues).
Assuming the Shaw facts–that a project failed to receive significant tax credits because it was completed late–who would be liable for those lost tax credits? Would it be the general contractor? The owner? The architect or engineer? What if the project was delayed because of unforeseeably bad weather? What if it was a subcontractor’s mistakes? Or the engineer’s delay in approving modifications to project specs? An electrician who installed bad wiring had no idea his work could result in the loss of a large tax credit–is it fair to hold him responsible?
The shifting of liability should be expressly laid out in the contract documents, including who is liable if a project fails to obtain certain certifications. By clearly defining these items, parties may be able to avoid the litigation that comes with uncertainty in contract provisions. At a minimum, however, parties will put themselves in a better position if litigation does in fact arise.
One widespread school of thought has been that green building litigation will arise from projects that simply do not obtain the LEED requirements that are contracted for. Green or LEED-oriented buildings are much more costly to build than conventional buildings, and owners and developers pay a premium for this LEED branding. So they are clearly not going to be happy if a project does not obtain the certification that was expected. As with many construction defect or design defect cases, litigation may arise for breaches of contract or breaches of warranty.
However, this may not be the only theory of liability in the green building arena. A recent case out of Maryland, Shaw Development v. Southern Builders, suggests that the scope of potential liability may be broader.
The Shaw case arose in connection with a condo project in Maryland that included a number of green design features that were intended to support a LEED Silver application. The owner sued the general contractor seeking, among other things, over $600,000 in lost tax credits under a state green building program.
Maryland had provisions that provided tax credits to owners for building eco-friendly buildings. The procedure to receive this credit was to initially apply for a sort of preliminary certification of the project. The project would be built and then, when completed, it would be evaluated for final approval. The preliminary certification, however, contained an expiration date, and the condo project at issue in Shaw was not completed before that project’s preliminary certification expired.
The lawsuit in Shaw did not specify exactly how the general contractor was to be liable, and the case settled prior to trial so there is no precedential value either. However, it is quite possible that the design actually was adequate–the project was just not delivered in time to qualify for the tax credits.
So what is the lesson to be learned from Shaw? Actually, the key in all green building contracts, particularly ones that contemplate LEED certifications and/or green-based tax credits (or even service provider discounts, such as electricity) is to define and clarify risk and set out which party will be liable for certain failures. That means being sure your contract actually fits the project and isn’t just a blanket form (Note: the contract at issue in Shaw was an AIA form but clearly did not address these issues).
Assuming the Shaw facts–that a project failed to receive significant tax credits because it was completed late–who would be liable for those lost tax credits? Would it be the general contractor? The owner? The architect or engineer? What if the project was delayed because of unforeseeably bad weather? What if it was a subcontractor’s mistakes? Or the engineer’s delay in approving modifications to project specs? An electrician who installed bad wiring had no idea his work could result in the loss of a large tax credit–is it fair to hold him responsible?
The shifting of liability should be expressly laid out in the contract documents, including who is liable if a project fails to obtain certain certifications. By clearly defining these items, parties may be able to avoid the litigation that comes with uncertainty in contract provisions. At a minimum, however, parties will put themselves in a better position if litigation does in fact arise.
Monday, May 11, 2009
Chinese Drywall and Statutory Indemnity: The Intersection of Construction Law and Products Liability
Anyone who has paid attention to construction news in the last 6 months knows that one of the hot topics has been Chinese drywall. According to the reports, tainted drywall manufactured in China emits potentially toxic chemicals including carbon disulfide, carbonyl sulfide, and hydrogen sulfide. In larger amounts, these emissions may create a health risk and the defective drywall emits a sulfur-like odor. These toxic materials also may corrode metals within a building, damaging wires, pipes, air conditioners, electronic equipment, etc.
As a result of these defects, Chinese drywall problems have led to a flurry of litigation. If the drywall is in fact defective, the manufacturers may be faced with liability. However, when litigation arises, you can rest assured that the manufacturer will not be the only named defendant. At a minimum, the builder would likely be named as a co-defendant in the lawsuit. Suppliers would probably be included as defendants as well. In fact, more than likely, every party from the painters up the chain to the manufacturers would be named in a lawsuit.
What if your company had no idea it was dealing with defective drywall but still finds itself stuck in the middle of litigation? What if your company didn’t know it was supplying a bad product. What if you just installed the materials your long-time supplier provided? Is there any protection for you in this situation, or does your company simply have to live with a big target on its back?
While there has certainly been an increase in tainted Chinese drywall litigation, the good news for builders and those in the construction industry is that there may be statutory indemnity available to pass along the costs of litigation to the manufacturers. In Texas, builders have Chapter 82 of the Texas Civil Practice & Remedies Code to lean on. In short, Chapter 82 (more specifically Section 82.002) requires a manufacturer to indemnify and hold harmless a seller against a loss arising out of a "products liability action," except for any loss caused by the seller’s own negligence, intentional misconduct, or negligently modifying or altering the product.
For purposes of this provision, a "seller" is a person who is engaged in the business of distributing or otherwise placing into the stream of commerce a product or any component part. The term "seller" is not limited to the traditional role of wholesale distributor or retailer that you would typically associate with the term. A "products liability action" is any action against a manufacturer or seller for recovery of damages arising out of personal injury, death, or property damage allegedly caused by a defective product.
The statutory indemnity required by Chapter 82 of the Texas Civil Practice & Remedies Code applies regardless of the way in which the action is concluded and is in addition to any other duties to indemnity (such as a contractual duty). This indemnity also includes attorney’s fees and court costs.
"Indemnity is great, but I still don’t want a judgment against my company," you say. You may still be in luck. Generally speaking, a seller that did not manufacture a product is not liable for damages related to that product unless the claimant proves:
Product liability law takes into consideration the innocent seller and carves out protections for them so they are not liable for defective products they had no real hand in creating or warning about. But this indemnity is not automatic–it should be formally requested of the manufacturer within a reasonable time after the claim. Even then, the would-be indemnitor can deny the request, forcing the innocent seller to seek enforcement through litigation. The good news, however, is that attorneys’ fees are typically recoverable when enforcing an indemnity request (if successful).
Even though products liability and construction law aren’t typically thought of together, the current Chinese drywall situation shows that there can be an overlap of these two areas of law. It is important to know your rights and obligations so you are not left liable for someone else’s mistake.
As a result of these defects, Chinese drywall problems have led to a flurry of litigation. If the drywall is in fact defective, the manufacturers may be faced with liability. However, when litigation arises, you can rest assured that the manufacturer will not be the only named defendant. At a minimum, the builder would likely be named as a co-defendant in the lawsuit. Suppliers would probably be included as defendants as well. In fact, more than likely, every party from the painters up the chain to the manufacturers would be named in a lawsuit.
What if your company had no idea it was dealing with defective drywall but still finds itself stuck in the middle of litigation? What if your company didn’t know it was supplying a bad product. What if you just installed the materials your long-time supplier provided? Is there any protection for you in this situation, or does your company simply have to live with a big target on its back?
While there has certainly been an increase in tainted Chinese drywall litigation, the good news for builders and those in the construction industry is that there may be statutory indemnity available to pass along the costs of litigation to the manufacturers. In Texas, builders have Chapter 82 of the Texas Civil Practice & Remedies Code to lean on. In short, Chapter 82 (more specifically Section 82.002) requires a manufacturer to indemnify and hold harmless a seller against a loss arising out of a "products liability action," except for any loss caused by the seller’s own negligence, intentional misconduct, or negligently modifying or altering the product.
For purposes of this provision, a "seller" is a person who is engaged in the business of distributing or otherwise placing into the stream of commerce a product or any component part. The term "seller" is not limited to the traditional role of wholesale distributor or retailer that you would typically associate with the term. A "products liability action" is any action against a manufacturer or seller for recovery of damages arising out of personal injury, death, or property damage allegedly caused by a defective product.
The statutory indemnity required by Chapter 82 of the Texas Civil Practice & Remedies Code applies regardless of the way in which the action is concluded and is in addition to any other duties to indemnity (such as a contractual duty). This indemnity also includes attorney’s fees and court costs.
"Indemnity is great, but I still don’t want a judgment against my company," you say. You may still be in luck. Generally speaking, a seller that did not manufacture a product is not liable for damages related to that product unless the claimant proves:
1) that the seller participated in the design of the product;
2) that the seller altered or modified the product and the claimant’s harm resulted from that alteration or modification;
3) that the seller installed the product, or had the product installed, on another product and the claimant’s harm resulted from the product’s installation onto the assembled product;
4) that:
a) the seller actually knew of a defect to the product at the time the seller supplied the product; and
b) the claimant’s harm resulted from the defect;or
5) that the manufacturer of the product is:
a) insolvent; or
b) not subject to the jurisdiction of the court
So how do these statutory provisions actually translate into indemnity or liability avoidance for tainted Chinese drywall claims?
If you’re the builder and you’ve been sued because tainted drywall caused damage to a structure (or its components) or personal injury, you can probably seek indemnity from the drywall manufacturer (assuming the builder was not involved in the design or warnings on the product). Similarly, if you’re a painter or sheetrocker who simply installed the materials without any material alteration, then you too would probably be able to seek indemnity from the manufacturer. In either situation, there's a decent chance your company would probably not be liable if it did not know about the allegedly defective product (indemnity notwithstanding).Product liability law takes into consideration the innocent seller and carves out protections for them so they are not liable for defective products they had no real hand in creating or warning about. But this indemnity is not automatic–it should be formally requested of the manufacturer within a reasonable time after the claim. Even then, the would-be indemnitor can deny the request, forcing the innocent seller to seek enforcement through litigation. The good news, however, is that attorneys’ fees are typically recoverable when enforcing an indemnity request (if successful).
Even though products liability and construction law aren’t typically thought of together, the current Chinese drywall situation shows that there can be an overlap of these two areas of law. It is important to know your rights and obligations so you are not left liable for someone else’s mistake.
Thursday, April 23, 2009
FINALLY, Some Positive Construction Economics News!
Ok, we all know the construction industry has taken it on the chin for while now, from the balance sheet to the evening news and everywhere in between. Well, the AIA finally gives us some positive news.
After a series of historic lows, the Architecture Billings Index ("ABI") was up more than eight points in March. As a leading economic indicator, the ABI is supposed to reflect the approximate 9-12 month lag time between architecture billings and construction spending. The March ABI reflected a decrease in overall demand for design services, but the score was nonetheless the highest it has been since September 2008. This news should probably be taken with cautious optimism, but any optimism represents an improvement for many builders.
Mixed design practices fared the best, followed by institutional, multi-family residential, and commercial/industrial.
So what is the legal take on this? Increased work equals new contracts. And with new contract formation comes the potential for contractual pitfalls–indemnity clauses, limitations of liability, pay-when-paid provisions, etc. As I’ve discussed in previous articles, many of these provisions are not quite as cut and dry as they would appear. The key is to get things right on the front end in preparing the contracts that govern the relationship (and obligations) of the parties. You negotiate hard for certain terms–be sure they are enforceable. On the flip side, be sure you’re not stuck with responsibilities (and liabilities) you didn’t think you had.
I’ve seen it countless times–the ounce of prevention really does beat the pound of cure.
After a series of historic lows, the Architecture Billings Index ("ABI") was up more than eight points in March. As a leading economic indicator, the ABI is supposed to reflect the approximate 9-12 month lag time between architecture billings and construction spending. The March ABI reflected a decrease in overall demand for design services, but the score was nonetheless the highest it has been since September 2008. This news should probably be taken with cautious optimism, but any optimism represents an improvement for many builders.
Mixed design practices fared the best, followed by institutional, multi-family residential, and commercial/industrial.
So what is the legal take on this? Increased work equals new contracts. And with new contract formation comes the potential for contractual pitfalls–indemnity clauses, limitations of liability, pay-when-paid provisions, etc. As I’ve discussed in previous articles, many of these provisions are not quite as cut and dry as they would appear. The key is to get things right on the front end in preparing the contracts that govern the relationship (and obligations) of the parties. You negotiate hard for certain terms–be sure they are enforceable. On the flip side, be sure you’re not stuck with responsibilities (and liabilities) you didn’t think you had.
I’ve seen it countless times–the ounce of prevention really does beat the pound of cure.
Tuesday, April 21, 2009
Deadline to Implement Federal E-Verify Requirement Pushed Back
On November 14, 2008, a Federal Acquisition Regulation ("FAR") rule was changed to require that certain federal agency contracts (and some subcontracts) include a provision mandating the use of the E-Verify program. But exactly what is E-Verify? In a nutshell, the E-Verify program is an online program, jointly administered by the Department of Homeland Security and the Social Security Administration, to verify employees’ information, including immigration status. This new rule would be in addition to the current Form I-9 requirements.
The E-Verify rule would require all federal solicitations and contracts over $100,000, lasting for a period of 120 days or more, to include a provision that contractors:
There are some exceptions to the E-Verify requirement–namely, contracts for items that are commercially available off-the-shelf.
This rule was supposed to go into effect on January 15, 2009; however, this date was recently pushed back for a second time and now it will not be implemented until at least June 30, 2009.
The reason for this most recent delay is the pending litigation Chamber of Commerce v. Chertoff, et al., in U.S. District Court for the District of Maryland. In December 2008, the U.S. Chamber of Commerce, among other groups, sued the Department of Homeland Security to have the mandatory E-Verify rule deemed illegal and to enjoin its enforcement. The plaintiffs in that case have filed for summary judgment, while the DHS and other defendants have asked the court for additional time to respond so that the Obama Administration can first complete its review of the federal contractor E-Verify requirement.
The political aspects of this issue notwithstanding, the E-Verify program is of particular significance to the construction industry because the time and cost-intensive nature of the program would add another layer of expense and burden to companies that enter into federal contracts. While the ideas behind E-Verify might be on the right track, the execution of the program would likely add to the strain of a construction industry that is already reeling from the current economic climate.
Whatever the courts decide about the E-Verify program, it is likely that some change in employee verification will be on the horizon–either the full blown E-Verify, a scaled-back version, or some other yet-to-written legislation. In the meantime, the best practice is to stay on top of employee I-9s for now and be mindful of potential changes in the future.
The E-Verify rule would require all federal solicitations and contracts over $100,000, lasting for a period of 120 days or more, to include a provision that contractors:
1. Enroll in E-Verify;
2. Use E-Verify for all new hires in the US;
3. Use E-Verify for all workers assigned to the contract; and
4. Include a provision in certain subcontracts for services and construction that are over $3,000.
There are some exceptions to the E-Verify requirement–namely, contracts for items that are commercially available off-the-shelf.
This rule was supposed to go into effect on January 15, 2009; however, this date was recently pushed back for a second time and now it will not be implemented until at least June 30, 2009.
The reason for this most recent delay is the pending litigation Chamber of Commerce v. Chertoff, et al., in U.S. District Court for the District of Maryland. In December 2008, the U.S. Chamber of Commerce, among other groups, sued the Department of Homeland Security to have the mandatory E-Verify rule deemed illegal and to enjoin its enforcement. The plaintiffs in that case have filed for summary judgment, while the DHS and other defendants have asked the court for additional time to respond so that the Obama Administration can first complete its review of the federal contractor E-Verify requirement.
The political aspects of this issue notwithstanding, the E-Verify program is of particular significance to the construction industry because the time and cost-intensive nature of the program would add another layer of expense and burden to companies that enter into federal contracts. While the ideas behind E-Verify might be on the right track, the execution of the program would likely add to the strain of a construction industry that is already reeling from the current economic climate.
Whatever the courts decide about the E-Verify program, it is likely that some change in employee verification will be on the horizon–either the full blown E-Verify, a scaled-back version, or some other yet-to-written legislation. In the meantime, the best practice is to stay on top of employee I-9s for now and be mindful of potential changes in the future.
Wednesday, April 8, 2009
Give 'Em A Brake
Most of us drive through highway or road construction zones regularly, if not daily. I personally drive through two each day in my daily commute. We do it so often that we frequently give little thought to the workers who are actually out there improving our roadways. So I was surprised to hear that for the past decade, there have been an average of 1,000 fatalities per year in highway work zones, with another 60,000 people injured, according to the Associated General Contractors (AGC). As a result, this week has been named National Work Zone Awareness Week.
The AGC has set a goal for federal and state governments to reduce the number of highway work zone fatalities by 50% within the next two years. Many states (including Texas) have already doubled the fines for moving violations in these areas in an effort to increase safety. Still, we drivers need to do our part too.
So in honor of National Work Zone Awareness Week and, more importantly, in honor of the contractors improving our roadways, slow down and pay attention when you see roadwork being done. It shouldn’t cost a life to repair a road or bride.
The AGC has set a goal for federal and state governments to reduce the number of highway work zone fatalities by 50% within the next two years. Many states (including Texas) have already doubled the fines for moving violations in these areas in an effort to increase safety. Still, we drivers need to do our part too.
So in honor of National Work Zone Awareness Week and, more importantly, in honor of the contractors improving our roadways, slow down and pay attention when you see roadwork being done. It shouldn’t cost a life to repair a road or bride.
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