|
Happy New Year!
We are excited to kick off 2024 with more in-depth insights into the construction industry and legal issues that can impact your business. As always, please feel free to reach out with questions and suggestions for this publication. Our goal is to provide the most up-to-date information along with our thoughts and opinions.
Upcoming Events
On January 11, 2024 at 2pm EST, Steven Hemric will be giving the presentation "Redlining Your Contract....Avoiding Pitfalls and Costly Mistakes” at a joint meeting between the North Carolina Bar Association Construction Law Section and the United Minority Contractors of North Carolina. Click here here to learn more and RSVP.
On January 23, 2024 at 11am EST, Spilman attorney Shane Riley will be hosting a webinar "AI & Copyright Law: Understanding the Next Chapter." He will discuss the current impact of generative AI on U.S. copyright law and policy, including recent guidance from the U.S. Copyright Office, lawsuits making headlines, and where we might go from here. Click here to learn more and register.
Congratulations to our new Members!
We also want to take a moment and congratulate Steven Hemric and Lee Denton, both in our Winston-Salem, NC office, who have been named Members of the firm. Both Steven and Lee are integral to our practice and both are heavily involved in our construction practice group. This recognition is much deserved!
Thank you for reading!
Stephanie U. Eaton - Co-Chair, Construction Group; Vice Chair of Southern Offices, Litigation Department; Editor, The Site Report
and
Julian E. Neiser - Co-Chair, Construction Group; Vice Chair of Northern Offices, Litigation Department
| |
Department of Labor Publishes Final Rule on Independent Contractors Under the Fair Labor Standards Act | |
|
By Carrie H. Grundmann
On Tuesday, January 9, 2024, the Department of Labor (“DOL”) announced its final rule on independent contractors under the Fair Labor Standards Act (“FLSA”). This final rule will be important to entities, including construction, where the line between employee and independent contractor is often at issue. Under the Final Rule, which largely tracks the rule as proposed in October 2022, DOL will consider six non-exhaustive factors to determine whether a worker should be treated as an employee versus a contractor, including
1. The worker’s opportunity for profit or loss.
2. Investments made by the worker and the employer.
3. The degree of permanence of the work relationship.
4. The nature and degree of the employer’s control over the worker’s performance of the work.
5. The extent to which the work performed is integral to the employer’s business.
6. The use of the worker’s skill and initiative.
The factors set forth above are not a bright-line test. Instead, as noted by Jessica Looman, administrator of DOL’s Wage and Hour Division, “[i]t provides fact-based analysis that does need to be applied in each circumstance to determine whether a worker is an employee or independent contractor in business for themselves.” Thus, employers will need to consider the fact-specific nature of each independent contractor relationship to determine whether a worker is actually an employee. Employers in industries that routinely work with independent contractors need to be mindful of this new rule and should review their policies and procedures to ensure they are maintaining appropriate guardrails to avoid being found to have misclassified a worker as an independent contractor, which carries significant fines and penalties.
The Final Rule will be published in the Federal Register on January 10, 2024, and is slated to take effect on March 11, 2024.
In addition, the DOL is rescinding the independent contractor final rule put in place in 2021 during the Trump administration. Legal challenges to this rescission, which the Biden administration previously attempted to rescind in May 2021 but was blocked by a federal court, are anticipated.
| |
|
“Infrastructure and equipment markets surveyed for the 2024 Annual Report & Forecast fell slightly short of expectations in 2023, mainly because one market lagged the others: water infrastructure.”
Why this is important: The construction equipment market is expected to hold steady as it heads into 2024. Aside from those involved in the water infrastructure market, which is currently bogged down with regulations and policy uncertainty, industry experts forecast a “good” or “very good” business year for equipment firms and fleet managers involved in the transportation and infrastructure sector. Previously, fleet managers and rental firms reported high levels of competition with 67.6 percent and 69.1 percent, respectively. As a result, those in need of heavy equipment can expect competitive prices when it comes time to either acquire or lease equipment in 2024. --- Jonathan A. Deasy
| |
|
“The White House announced the implementation of an executive order to require project labor agreements on federal construction jobs above $35 million.”
Why this is important: President Biden recently announced the implementation of an executive order mandating project labor agreements (“PLAs”) on federal construction jobs exceeding $35 million. The decision marks a significant shift in the administration's approach to large-scale infrastructure projects, with the articulated goal of promoting fair labor practices, ensuring worker rights, and fostering collaboration between contractors and labor unions.
Project Labor Agreements are pre-hire collective bargaining agreements between project owners and labor organizations that set terms and conditions of employment for all workers involved in a specific construction project. These agreements aim to establish a framework for labor relations, ensuring projects are completed efficiently, on time, and within budget. PLAs typically cover issues such as wages, working hours, and dispute resolution mechanisms.
The White House's executive order mandates the use of PLAs on federal construction projects with a total value exceeding $35 million. This move aligns with President Biden's broader agenda to revitalize the nation's infrastructure and create jobs while prioritizing fair and equitable treatment for workers. The executive order emphasizes the administration's commitment to fostering collaboration between contractors, subcontractors, and labor unions to create a more harmonious and efficient construction process.
According to the White House, the key objectives of the Executive Order include:
- Ensuring fair wages and working conditions
- Promoting collaboration and efficiency
- Job creation and economic growth
- Prioritizing diversity and inclusion
While the executive order has received support from labor unions and those advocating for workers' rights, it has also sparked debates within the construction industry. Some critics argue mandating PLAs may increase project costs and limit competition, potentially disadvantaging smaller contractors. The administration, however, contends the long-term benefits of improved efficiency, worker satisfaction, and project success outweigh any short-term challenges. --- Kevin L. Carr
| |
|
“The senate study committee concluded that the now decades-old law prevents health care delivery, especially for places like rural Georgia.”
Why this is important: In the mid-1970s, the federal government passed Certificate of Need (“CON”) laws enacted to evaluate the availability and duplication of services provided by health care facilities within a certain radius. Before constructing a new medical care facility, CON laws require applicants to provide proof of need in a given area. Although the federal laws were repealed by Congress, many states, including Georgia, still have CON laws in place. According to the Georgia Department of Community Health, Georgia’s CON program, dating back to 1979, is “intended to achieve three goals: (1) to measure and define need, (2) to control costs, and (3) to guarantee access to healthcare services.”
Recently, the Georgia Senate’s Study Committee on Certificate of Need Modernization found new hospitals may be needed in rural areas so health care providers can provide more preferred or quality choices and technologies in those areas, instead of continuing to support older, existing rural facilities that do not provide more modern services. As a result, the Senate recommended legislators repeal the CON mandate.
Opponents of CON laws contend the laws are obsolete and contribute to rising costs of and decreased access to health care; they want the laws repealed to foster competition among health care providers to provide lower prices. On the other hand, proponents of the CON laws argue repealing the laws could negatively impact rural hospitals, forcing rural hospitals to compete with newer hospitals in urban areas. To support their position, proponents of CON laws have observed other states, such as North Carolina (which has CON requirements for hospital and ambulatory surgery centers) have had many rural hospital closures. Hometown Health’s CEO Jimmy Lewis reported that 16 rural Georgia hospitals closed since the 1990s.
If the Senate Study Committee’s recommendation is accepted by the Georgia Legislature in 2024, it would likely result in the construction of new medical care facilities. Georgia contractors working in the health care facility construction sector should watch for legislative updates on the state’s CON laws, as a repeal of the laws would likely impact the number and location of health care facility construction projects in the state. --- Stephanie U. Eaton
| |
|
"Spending in the manufacturing sector has ballooned since the CHIPS Act was signed into law in August 2022."
Why this is important: Following the enactment of the CHIPS Act in August 2022, manufacturing construction spending continues to see significant growth as the U.S. seeks to gain ground on other countries’ manufacturing dominance. According to an Associated Builders and Contractors analysis, manufacturing construction spending saw a 12-month increase of 71.2 percent through October 2023. The projects currently underway include everything from biotechnology facilities and chip fabrication plants to electric vehicle batteries and clean energy projects. With several $1 billion or more manufacturing projects additionally in the pipeline for this year, industry experts expect to see continued growth in 2024. --- Jonathan A. Deasy
| |
|
“This is the second Florida bill filed in recent months that would roll back certain child labor protections.”
Why this is important: Recently, a Florida Republican has introduced a bill designed to permit teenagers to work in roofing and construction industries, marking the second attempt in recent months to roll back specific child labor protections. This proposed legislation has ignited debates surrounding the well-being and safety of young workers, raising questions about the potential impact on their education and overall development.
Details of the Bill:
The bill, spearheaded by the Florida Republican lawmaker, seeks to relax existing restrictions on the employment of teenagers in roofing and construction jobs. Currently, there are age-related limitations and safety measures in place to protect young workers from hazardous conditions. However, proponents argue these restrictions hinder economic growth and limit opportunities for teenagers to gain valuable work experience.
Controversial Rollback:
This move has sparked controversy as critics express concerns about the potential risks and adverse effects on the physical and educational well-being of young individuals. The existing child labor protections were put in place to safeguard minors from dangerous working conditions and ensure their educational priorities are not compromised.
The proposed bill is part of a broader trend where some lawmakers advocate for reducing regulations to encourage economic growth. However, opponents argue such measures could lead to exploitation and endanger the health and safety of young workers, particularly in industries known for their physical demands and potential hazards.
Impact on Education:
One significant point of contention is the impact this legislation may have on the education of teenagers. Critics worry by allowing young individuals to work in physically demanding jobs, their ability to focus on their studies and pursue academic success could be compromised. Balancing work and education is a delicate task, and easing child labor restrictions might exacerbate the challenges faced by young workers trying to manage both responsibilities.
Safety Concerns:
The roofing and construction industries are known for their inherent risks and safety hazards. Allowing teenagers to work in such environments could expose them to dangers their older counterparts are better equipped to handle. Critics argue safety should be prioritized over economic considerations and existing regulations serve a crucial role in protecting the well-being of young workers.
Public Response and Debate:
The introduction of this bill has prompted a robust public debate, with individuals and organizations expressing divergent views on the matter. Advocacy groups concerned with workers' rights and child welfare have voiced their opposition, emphasizing the importance of maintaining stringent regulations to ensure the protection of young workers.
Conclusion:
As the debate over the proposed bill continues, Florida finds itself at the center of a contentious discussion about the balance between economic interests and the well-being of young workers. The potential rollback of child labor protections in roofing and construction industries raises critical questions about safety, education, and the long-term impact on the lives of teenagers entering the workforce. The outcome of this legislative proposal will likely have broader implications for the ongoing dialogue surrounding labor regulations and the protection of vulnerable workers. --- Kevin L. Carr
| |
|
“That’s because the Environmental Protection Agency has found that Florida has more lead pipes in its water systems — 1.16 million of them — than any other state, according to the Tampa Bay Times.”
Why this is important: Following the EPA’s survey of 3,500 water systems in the United States, the EPA identified 1.16 million lead pipes in Florida’s water systems. The existence of these lead pipes has important health and construction implications.
On the health side of the situation, the EPA notes drinking water contaminated with lead can cause anemia, heart problems, and lower IQ rates among children. The EPA provides guides to determine whether your home or business has a lead service line or if there is lead in your water.
On the construction side of the situation, this article highlights that even after bans on the use of lead pipes took effect in Florida, some contractors still used the pipes to connect homes, businesses, schools, and other buildings to water meters. Moreover, various faucets and fixtures contained lead. The Bipartisan Infrastructure Law provides $15 billion in funding to replace old lead service lines across the country. Further, the EPA’s Water Infrastructure State Revolving Fund programs have provided funds to replace the service lines. With the availability of federal funding and initiatives, contractors specializing in the repair and installation of water service lines and plumbing services are expected to remain busy with an influx of water line/plumbing fixture replacements throughout Florida. Do not hesitate to contact our Construction Practice Group if you have questions related to a water line replacement project ongoing or planned for 2024. --- Stephanie U. Eaton
| |
New Occupational Safety and Health Administration Injury Reporting Rules | |
|
By Mark E. Heath
To improve the tracking of workplace illnesses and injuries, OSHA on January 2, 2024 began requiring electronic submission of OSHA Forms 300 and 301. Additionally, the following new changes and requirements go into effect, which will be applicable to both federal OSHA and states with state plans, including:
- Worksites with 100+ employees in designated high-hazard industries (listed in Appendix B to Subpart E of 29 CFR Part 1904) must electronically submit to OSHA detailed information about each recordable injury and illness entered on their previous calendar year’s OSHA Form 300 Log and Form 301 Incident Reports (29 CFR 1904.41). Data that impacted industries are already obligated to collect and retain, including the date, physical location, and severity of the injury or illness; details about the worker who was injured; and details about how the injury or illness occurred, will now also need to be submitted to OSHA.
- The new system retains the requirement for establishments with 250+ employees in industries that must routinely keep records to submit the OSHA Form 300A Annual Summary and each establishment must provide their legal company name when submitting their data. OSHA has announced it is setting up an ITA Coverage Application to help establishments determine whether they have to comply with these new requirements.
The amount of new data going to OSHA under these new rules is extensive. OSHA estimates approximately 50,000 establishments will now be required to submit their case-specific injury and illness data, which will result in reports on approximately 750,000 injury/illness cases annually. According to OSHA, establishments with 100+ employees in higher hazard industries represent fewer than one percent of establishments in the country but nearly 30 percent of all reported injuries and illnesses. OSHA plans to use the data to help it identify establishments with specific hazards, and to allow for direct interaction and outreach to these establishments to address the hazards and improve worker safety and health. OSHA also expects the data will allow it to better analyze injury trends related to specific industries, processes or hazards. Finally, OSHA plans to make most of the data available to the public.
The data must be electronically submitted annually through OSHA’s Injury Tracking Application (ITA). The ITA began accepting 2023 data on January 2, 2024, and all data must be submitted by no later than March 2, 2024.
OSHA has also announced final data for year 2022 fatalities on its website. In 2022, 5,486 workers in the United States died on the job, with deaths the highest among transportation and construction workers. Black workers’ fatality rates increased by 12.4 percent, and Hispanic workers’ fatality rates grew by 10.4 percent. These statistics will likely be used in inspections and enforcement issues CSHOs look at in 2024.
For further information about developments related to OSHA or workplace health and safety, contact Mark Heath, Co-Chair of Spilman’s OSHA practice group.
| |
|
“As attorneys, we are asked a myriad of questions regarding the construction industry. And while each situation is different, many things hold fast and true. One of the most important recommendations we make is to read your contracts thoroughly BEFORE signing them. Reading contracts before signing is crucial to ensure that you fully understand the terms, protect your rights, mitigate risks, and prevent potential misunderstandings or legal issues that may arise from the agreement. Having an attorney read your contracts prior to an agreement is just as important. Taking that extra step to have an attorney review any agreements could save you time, effort, and perhaps much investment in the future.” --- Steven Hemric and Lee Denton
If you have any questions for Steven, Lee or the rest of our Construction Practice Group, please reach out.
| |
|
Steven C. Hemric
Member
Winston-Salem, NC
office 336.631.1063
shemric@spilmanlaw.com
Steven practices in North Carolina and South Carolina with a focus on advising construction industry clients across all project stages, from bidding and contract negotiation through resolution of jobsite disputes and litigation. He also advises a variety of business clients from startups to Fortune-recognized businesses on supply chain, insurance coverage, and general transactional and litigation-related issues that impact their businesses.
He was named to the North Carolina Super Lawyers “Rising Stars” list in 2022 and 2023 and named on the Best Lawyers: Ones to Watch list for Construction Law and Litigation - Construction.
Steven is a member of the DRI Construction Committee; North Carolina Bar Association Construction Law Section and Chair of the Minority Contractors Liaison Committee; North Carolina Bar Association Construction Council; and the Forsyth County Bar Association, Young Lawyers Division.
He received his B.S. from Wake Forest University, and his J.D. from Wake Forest University School of Law.
| |
|
Lee D. Denton
Member
Winston-Salem, NC
office 336.727.7646
ldenton@spilmanlaw.com
Lee practices in North Carolina and Georgia and assists businesses and individuals to resolve complex construction, contract, and commercial disputes. Lee has represented clients in every state and federal trial court in North Carolina, including the North Carolina Business Court, where Lee served a two-year clerkship at the beginning of his career.
He has been named to the North Carolina Super Lawyers “Rising Stars” list every year since 2019. In 2021-2022, he was named to Business North Carolina’s Legal Elite as a Young Gun. And, Best Lawyers has named him to the Ones to Watch list for Commercial Litigation, Construction Law, and Litigation - Construction.
Lee has been a Council Member of the Antitrust & Complex Business Disputes Section for the North Carolina Bar Association and a Co-Chair of the Young Lawyer Division’s Mentoring Committee. In addition, he is a member of the DRI: Business Torts & Contracts Litigation Committee and Commercial Litigation Committee, and Greater Winston-Salem, Inc.
Lee received his B.S. from Appalachian State University and his J.D. from Wake Forest University School of Law, where he served as Editor-in-Chief of the Wake Forest Law Review.
| |
|
This is an attorney advertisement. Your receipt and/or use of this material does not constitute or create an attorney-client relationship between you and Spilman Thomas & Battle, PLLC or any attorney associated with the firm. This e-mail publication is distributed with the understanding that the author, publisher and distributor are not rendering legal or other professional advice on specific facts or matters and, accordingly, assume no liability whatsoever in connection with its use.
Responsible Attorney: Michael J. Basile, 800-967-8251
| | | | |
