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Welcome to our 10th issue of 2024 for our construction industry insights e-newsletter - The Site Report. In this edition, we cover a wide variety of topics of interest for those in the construction industry—from the use of Generative AI and cybersecurity to OSHA’s Heat Regulation Rule to environmental litigation risks relevant to construction projects. In addition, don’t miss the important information from our corporate team member Tony Huber on compliance with the Corporate Transparency Act in our “Ask the Attorney” Section below. Enjoy reading and Happy Halloween!
Former WV Commerce Secretary James Bailey Joins Spilman
Spilman is excited to welcome James Bailey, former WV Commerce Secretary, to the firm. James brings extensive public sector experience and will focus on government relations, government contracts, public finance, and general corporate law. His addition bolsters the firm’s already strong capabilities in navigating the complex intersection of business and government. Click here to learn more about James and his practice.
ABA Annual Labor and Employment Conference - New York, NY, November 13-16
We are also looking forward to hearing from our Spilman colleagues as they present at the ABA Annual Labor and Employment Conference in New York City November 13-16. This conference is the Section’s signature event of the year, which will offer cutting-edge and in-depth programs covering developments across the full range of labor and employment law topics along with numerous networking opportunities. Spilman is pleased to be a sponsor of the Section and this exciting program! Click here to learn more.
Thank you for reading!
Stephanie U. Eaton - Co-Chair, Construction Group; Vice Chair of Southern Offices, Litigation Department; Editor, The Site Report
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Julian E. Neiser - Co-Chair, Construction Group; Vice Chair of Northern Offices, Litigation Department
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OFCCP Publishes New Scheduling Letter for Construction Contractors | |
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The Office of Federal Contract Compliance Programs (OFCCP) “holds those who do business with the federal government (contractors and subcontractors) responsible for complying with the legal requirement to take affirmative action and not discriminate on the basis of race, color, sex, sexual orientation, gender identity, religion, national origin, disability, or status as a protected veteran. In addition, contractors and subcontractors are prohibited from discharging or otherwise discriminating against applicants or employees who inquire about, discuss or disclose their compensation or that of others, subject to certain limitations.”
On October 2, 2024, the OFCCP released a new Scheduling Letter and Itemized Listing for Construction Contractors. This Scheduling Letter applies to any construction audits initiated “on or after October 1, 2024.” The new OFCCP Letter requires construction contractors to provide the following:
- Detailed documents related to its personnel (e.g. payroll beyond base pay);
- Detailed documents related to its employment practices (e.g. employment data for all trade employees, including employees who supervise, inspect, or are responsible for other onsite work incidental to the construction itself);
- Report lay-offs, including employee name, gender, ethnicity, trade, job title, reason for layoff and eligibility for the employee to be rehired;
- A compliant Equal Employment Opportunity (EEO) Policy Statement, as well as the contractor’s policies for antiharassment, policies on employment agreements that impact employees’ equal opportunity rights and complaint processes, and any EEO compliant policies;
- Documentation to demonstrate that the contractor is monitoring its employment activities to ensure that its job classifications, work assignments and seniority practices do not have a discriminatory effect and that the contractor’s EEO obligations are fulfilled;
- Information regarding the employer’s use of artificial intelligence (AI) or automated systems in hiring employees, including all selection procedures and tests used to fill relevant positions in the Standard Metropolitan Statistical Area (SMSA) selected for audit, and include information regarding validation of those tests and selection procedures in accordance with federal law; and
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For contractors with federal direct or subcontracts other than federally assisted subcontracts, there are updated requirements for submissions related to individuals with disabilities (Section 503 of the Rehabilitation Act of 1973) and protected veterans (Vietnam Era Veterans’ Readjustment Act of 1975 -- VEVRAA). --- Stephanie U. Eaton
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The ABA Forum on Construction Law Fall Program Recap | |
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The American Bar Association (ABA) is a premier national legal organization, and its subject matter-focused sections, divisions, and forums bring together attorneys from across the nation to make connections, exchange ideas, and stay on the cutting edge in their areas of practice. Julian Neiser and Steven Hemric from Spilman’s Construction Practice Group are members of the ABA’s Forum on Construction Law and had the pleasure of attending the Forum’s Fall Meeting in Pittsburgh on October 23-25. Spilman also had the honor of sponsoring a post-event tour of Pittsburgh’s Andy Warhol Museum, one of the most comprehensive single-artist museums in the world.
This meeting was the first of a planned trilogy of meetings designed to address hot topics and issues facing the three main construction project participants—design professionals, owners/developers, and contractors—and the discussions and presentations at the Fall Meeting focused on the project design phase. Julian and Steven had the opportunity to hear and share different perspectives on a myriad of topics ranging from contract negotiation, to key issues during construction administration, to best practices on design-build projects, to the emerging impacts of artificial intelligence and increased reliance on BIM modeling as a project deliverable. As the Spilman Construction Practice Group looks forward to continuing to provide clients with the best solutions and guidance possible across all project stages, it will be staying at the forefront of the industry and putting into practice the new insights the practice group members gain through events like this one. --- Steven C. Hemric
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“The solutions are out there, but the right amount of investment is still an enigma for firms in the industry.”
Why this is important: Construction professionals looking to leverage the power of generative artificial technology are asking themselves whether or not this is the right move for their business. Often, this technology is marketed at the highest level, simply exclaiming how much value it can provide without really providing any real examples. That being said, the answer on whether or not construction professionals should implement this technology as part of their business is context-dependent. Those involved in large construction projects may certainly benefit the most from this technology. For example, generative AI models can be created to alert an administrator if a change order is more than $5,000 or exceeds the gross profit margin of a given job. Regardless, construction professionals at all levels must still be cognizant of the data security issues that may arise through the use of generative AI. --- Jonathan A. Deasy
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“Cybersecurity experts note a significant rise in fake job offers, with over 245,500 people scammed last year, and a 25% increase in these scams from 2022 to 2023.”
Why this is important: Those who are unemployed have become vulnerable targets to fake job listings. These fake listings look realistic thanks to generative AI and there has been a significant increase in these types of scams. From 2022 to 2023, there was a 25 percent increase in fake job listing scams. There are a couple of reasons for the uptick in these scams. The first is how evolved AI has become to make these jobs look incredibly realistic and attractive. The second is the number of layoffs that have occurred especially in the tech sector. Those who are desperate and trying hard to find a job are vulnerable to these fake listings as they are trying to gain employment as quickly as possible.
The scams often ask for upfront payments for job-related equipment, but they aren’t solely interested in obtaining money. The scams are in place in order to obtain personal information. A prospective employee may not think twice about giving their bank information, driver's license number, or their social security number because this is all information one would give to a real employer. The information being sought in the scam is reasonable information an employer would want you to give to them for different reasons like payroll, contact information, and their own databases.
Employers and recruiters who are actively hiring need to act in order to prevent confusion between their real listings and the fake listings generated by AI. One move that those hiring can make is to post the listings directly to their organization's website, giving it more credibility. If a company limits the places where their job openings can be posted, then those applying know where the real listings are. When posting listings, a company can emphasize that these listings will not appear anywhere else. These practices can ensure that those applying can trust these real listings.
Those seeking employment need to be able to tell the difference between a real listing and a fake one. There are a couple of red flags to look for when examining a listing. If a job is paying much more than you would expect then this is a red flag for a scam. If the correspondence is entirely over the internet for a job, this is also a red flag. Asking as many questions as possible is a way to figure out if a listing is real. Conducting thorough research is also a way to prevent being tricked by a fake job listing. In the world today, every business has an online footprint, and if the one being researched does not, then it is probably not real. --- Nicholas A. Muto
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An Update on OSHA’s Heat Regulation Rule | |
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By Mark E. Heath
The OSHA process for issuing a new heat regulation is finally heating up. On August 30, 2024, OSHA published its Notice of Proposed Rule Making (NPRM) in the Federal Register. The path to get to this NPRM has been a long one. Indeed, OSHA published an Advance Notice of Proposed Rulemaking nearly three years ago in October 2021.
In publishing the NPRM, OSHA noted that heat is a leading cause of weather-related deaths in the United States (not just in the workforce). Moreover, as it gets hotter in the United States, heat is – and will remain – a growing issue in the workforce, and employers are already having to deal with how to minimize the effects of heat on employees.
While the rulemaking process is ongoing, OSHA has previously announced that it is using the General Duty Clause, also known as Section 5 of the OSH Act, to enforce heat protection for workers now and require employers to take steps to prevent employee exposure to serious heat events. The Heat National Emphasis Program will remain in effect until April 2025. Essentially, OSHA is using its powers under the General Duty Clause to bridge the time between considering and finalizing a heat standard rule.
Click here to read the entire article.
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A Case Law Update on West Virginia Supreme Court of Appeals Rulings Impacting Workers’ Compensation Claims | |
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By H. Dill Battle III
Over the last approximately 12 months, the West Virginia Supreme Court of Appeals has issued numerous decisions impacting workers’ compensation claims, addressing (1) apportionment calculations of preexisting awards and conditions in workers’ compensation claims; (2) compensability for injuries occurring at work but not related to work; (3) permanent partial disability post-lung transplant; and (4) the scope of collateral estoppel.
Click here to read the entire article.
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“CISA attributed 2 in 5 successful intrusions to valid account abuse last year, but that is down from 2022.”
Why this is important: Access to valid accounts remained the most common and successful path for threat actors to gain access to critical infrastructure environments last year, according to several reports. According to one report, almost one-third of all global cyberattacks arose from compromises of valid accounts. Another report explained that compromising legitimate account credentials resulted in almost 40 percent of all ransomware attacks. Though the number of attacks declined from 2022, the reports still provide a significant warning. Whether or not a company is in the critical infrastructure space, the importance of guarding against account compromises cannot be overstated. Good password hygiene, multi-factor authentication, regular training, and simulated phishing attacks are all important parts of a company’s cyber defenses. If you have any questions about the measures your company has in place, contact Spilman’s cybersecurity and data privacy practitioners. --- Nicholas P. Mooney II
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“So far this year, PennDOT has advanced more than 360 bridge projects.”
Why this is important:The Pennsylvania Department of Transportation continues to make headway on the Commonwealth’s dilapidated bridge infrastructure. So far this year, PennDOT has advanced more than 360 bridge projects. Currently, nearly 1,500 projects totaling $9.2 billion are underway or are soon expected to go out for bid or begin construction. Construction professionals looking to take advantage of this growth should therefore keep an eye out for upcoming projects in their particular region. --- Jonathan A. Deasy
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“Adverse weather impacts, climate-related design failures, ‘forever chemicals’ pollution and greenwashing are causing an increase in claims and disputes, says research.”
Why this is important: So far in 2024, the United States has experienced record-breaking extreme weather – from devastating flooding in the Southeast following Hurricane Helene and crushing storm surge along the Gulf Coast of Florida from Hurricanes Debby, Helene and Milton, to severe wildfires in New Mexico, damaging hail storms in Colorado and Texas, and outbreaks of tornadoes in the central, southern, and southeastern states from May onward. In fact, there have been 24 “billion-dollar” weather disasters responsible for more than 400 fatalities in the United States alone this year. Coupled with various environmental pollution, these adverse weather impacts have resulted in environmental litigation risks for construction projects in the United States and all over the world.
This article is important because it highlights research conducted by consulting firm HKA on more than 2,000 projects across 107 countries to evaluate the impacts that environmental claims are having on the construction industry. While road construction projects and offshore wind projects were particularly susceptible to damage from extreme weather, at 13.7 percent and 10.5 percent respectively, the risk of environmental litigation is present on virtually every project.
Consider your current projects, noting that environmental litigation related to a construction project can involve the following issues:
- Whether building code requirements to protect buildings from foreseeable weather and pollution factors were met on a particular job;
- Whether construction materials staged on site were protected from damage and destruction during storm events, including the damage those materials can cause to other properties;
- Whether construction workers were protected from extreme weather possibilities such as heat (with sufficient breaks, access to water and shade) and tornadoes (shelters);
- Whether the contract allowed for Force Majeure (to include extreme weather, natural disasters, and the like) events to delay the project without consequences to the contractor and subcontractors;
- Whether insurance procured for the project is sufficient to cover environmental litigation and if not, who pays for the litigation and/or resulting damages;
- Whether the contract spells out what parties are liable for delays caused by environmental impacts to the project;
- Whether there is a possibility for supply chain, fuel, and/or labor disruption caused by extreme weather – depending on where the project is located and/or time of year the construction is to occur; and
- Whether construction materials selected for a project are resilient in the face of water and/or wind damage, or whether those products are needed to make the project more “environmentally friendly.”
If you believe your construction project may be susceptible to environmental litigation, and/or claims have arisen for which you need legal assistance, our experienced team of litigators in Spilman’s construction practice group can help. --- Stephanie U. Eaton
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The FTC’s Rule Banning Noncompete Agreements is Dead. Long Live Noncompete Agreements? | |
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By Mitchell J. Rhein
Earlier this year, the Federal Trade Commission (FTC) announced a Final Rule outlawing nearly all noncompete agreements between employers and employees. That Final Rule, however, was overturned at the end of August 2024. After granting a limited injunction in July 2024, a Texas court invalidated the FTC’s Final Rule days before it was set to take effect on September 4, 2024.
The court ruled that the FTC has no authority to issue broad rules like the Final Rule banning noncompete agreements or invalidating millions of contracts retroactively. Instead, the court said the FTC could only deem noncompete agreements unfair methods of competition through case-by-case adjudication. The court also concluded the Final Rule was unenforceable because the FTC lacked sufficient evidence to support a categorical ban on non-compete agreements and failed to consider less restrictive alternatives.
So, what’s next?
Click here to read the entire article.
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Anthony L. Huber serves as Counsel in our Winston-Salem office. His primary areas of practice are corporate and tax law.
Question: For most eligible businesses, the filing deadline under the Corporate Transparency Act is January 1, 2025. As Counsel in our Winston-Salem office and someone who dedicates his time to handling corporate and tax law issues, what recommendations do you have when it comes to the CTA and compliance?
Answer: As stated, the deadline is rapidly coming up and if you miss the deadline or fail to update the necessary information, you could face up to two years imprisonment and fines up to $10,000, in addition to civil penalties of up to $591 per day. So paying attention to the CTA is vital for many businesses.
- The first obvious step is to make sure you understand the scope of the CTA. That may seem simple enough as most businesses fall under the CTA, but some organizations are exempt such as publicly traded companies and large operating companies with more than 20 employees, a physical U.S. presence, and $5 million in annual revenue. There are other exemptions that primarily apply to entities that are considered to already be providing significant ownership information, such as banks, insurance companies and nonprofits. The scope of the CTA is very broad aside from the exemptions, and includes disregarded entities such as single-member LLCs.
- Secondly, you need to identify the beneficial owners - individuals who directly or indirectly own or control at least 25 percent of the company or exercise substantial control. This information is reported on a beneficial ownership information (BOI) report.
- If your company was formed on or after January 1, 2024, you must file your BOI report with the Financial Crimes Enforcement Network (FinCEN) within 30 days of formation. Companies formed prior to January 1, 2024, must file their initial BOI reports by January 1, 2025.
- If any beneficial ownership or company information changes, such as a sale of controlling interest or other M&A transaction, you must report the change to FinCEN within 30 days. It’s critical you establish a system to help streamline those filings as filing last minute can be an issue and cause you to fall out of compliance.
- Your employees are your best tool when it comes to filing. Ensure key employees (compliance, legal, and finance) are well-versed in the CTA requirements.
- In today’s business atmosphere, cybersecurity should always be a concern and the CTA emphasizes that point. Beneficial ownership information is extremely sensitive so you need to engage in robust data security protocols. Even utilizing compliance software can help streamline this process.
And finally, it’s always a good idea to have legal and compliance experts on hand to help navigate the complexities of the CTA. These professionals know the ins and outs of compliance and stay up-to-date on FinCEN guidance.
So while the deadline to file is January 1, 2025, many companies should be continually filing and that starts right now. If you need help with CTA or any compliance issues, please feel free to reach out for assistance.
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