HPSS Construction Law Update

Between February 1 and April 30, covered employers must post OSHA's Form 300A in a place easily accessible to employees, such as the break room. Form 300A summarizes the total number of work-related injuries and illnesses that occurred during the prior calendar year and entered into OSHA Form 300, which logs such injuries and illnesses. Whereas Form 300 should include details, such as the nature of the injury and where it occurred, Form 300A only lists information such as the total number of deaths, cases involving days away from work, and total number of days away from work for all recordable cases. Recordable cases are those that involve a death; days away from work; restricted work or transfer to another job; medical treatment beyond first aid; loss of consciousness; diagnosis of a significant injury or illness by a healthcare professional; or a needlestick or sharps injury involving contamination by another person's blood or other potentially infectious materials.

Construction employers must post Form 300A even if no recordable injuries occurred during the prior year, with zeroes entered in the spaces.

For the second consecutive year, employers also need to concern themselves with OSHA's Improve Tracking of Workplace Injuries and Illnesses regulation, often commonly referred to as OSHA electronic recordkeeping regulation. Employers subject to the rule must electronically submit their 2019 300A Annual Summary to OSHA no later than March 2, 2020.

Under current rules, injury and illness records must be maintained at the worksite for at least five years. Also, copies of the records must be provided to past and current employees, or their representatives, upon request.

If you have any questions about OSHA's recordkeeping requirements, or any other questions about OSHA, please contact Philip Siegel . You can reach Philip Siegel directly at (404) 469-9197 or e-mail him by clicking here .

Understanding OSHA: OSHA'S Increased Penalty Amounts

On November 3, 2015, President Obama signed the Bipartisan Budget Act of 2015 (Act) into law. The Act was a two-year deal that was negotiated quickly to avoid a default on our nation's debt. Budgets often contain obscure changes to laws that are not easily identified. However, this Act was unique because it contained a provision that allowed the Occupational Safety and Health Administration (OSHA) to increase its maximum penalties for the first time in 25 years.

Most government agencies typically have the authority to adjust their maximum penalty amounts annually for inflation. However, OSHA had not been allowed to adjust its penalties amounts since they were enacted over 25 years ago. Importantly, the Act does allow OSHA to annually adjust the maximum penalty amounts to reflect inflation, similar to other government agencies.

For 2020, OSHA recently announced maximum penalty amount increases to account for inflation. Penalties for an other-than-serious violation, a serious violation, and a failure-to-abate violation increased to $13,494, which represents a $234.00 increase over these same penalties in 2019. Willful and repeat violations now have a maximum penalty amount of $134,937 per violation, which represents an increase of $2,339.00 over last year's maximum penalty amount for willful or repeat violations.

In light of this increase in OSHA penalty amounts, and the fact that these amounts will continue to increase annually to account for inflation, it is a good time to revisit your company safety program to make sure you are taking those steps necessary to defeat a citation based on the unforeseeable employee misconduct defense. To establish the affirmative defense of unforeseeable employee misconduct, an employer must show that it (1) established work rules designed to prevent the violative conditions from occurring; (2) adequately communicated those rules to its employees; (3) took steps to discover violations of those rules; and (4) effectively enforced the rules when violations were discovered.

While most roofing contractors have work rules, provide training, inspect their jobsites, and discipline employees who violate safety rules, it is absolutely imperative that documents are maintained that provide evidence of the same, and that the company's safety program, especially its disciplinary component, is effective such that violations are truly unforeseeable. Even verbal reprimands should be documented. All documents which would support the affirmative defense of unforeseeable employee misconduct should be well organized and stored in a safe place for easy access in the event the company is cited for an OSHA violation.

Lessons to be Learned - Florida Roofing Contractor Faces $291,724.00 in Penalties for Repeated OSHA Fall Hazard Citations

As part of OSHA's Regional Emphasis Program for Falls in Construction, a West Palm, Florida based roofing contractor was cited for repeated violations for exposing employees to fall hazards at three residential worksites. The violations were a result of OSHA initiated inspections after OSHA inspectors observed employees working on the roof without fall protection. The contractor, CJM Roofing Inc., now faces penalties totaling $291,724.00.

These penalties could have been prevented. As OSHA penalty amounts continue to increase (in 2020, the maximum penalty for a serious violation is $13,494, while a willful or repeat violation could cost up to $134,937), it is vital that roofing contractors continue to be diligent in making sure they adhere to OSHA fall protection guidelines to prevent the kind of costly penalties incurred by CJM Roofing Inc.

What can be done? The first step is to make sure employees receive proper OSHA safety training. Second, roofing contractors, or third-party safety consultants, need to self inspect job sites to ensure employees understand and follow through with the OSHA safety training and are adhering to OSHA regulations. However, even with a robust safety program, OSHA inspections can and will occur. As such, the final step for roofing contractors is to have a game plan in place when an OSHA inspection occurs.

Currently, 8 out of the 10 OSHA Regional Offices have fall hazard local emphasis programs. These local emphasis programs specifically direct OSHA Compliance Safety and Health Officers to "be watchful for construction employees working at elevations, which upon observation, may be considered to be hazardous to the employees' safety. This means that OSHA regional offices are on the look out for plain view violations of OSHA's fall protection rules.

Be diligent, ensure all employees receive proper OSHA safety training, self inspect, and be prepared for any OSHA inspection. Let the recent CJM Roofing Inc. fall protection violations be a lesson learned on how to prevent costly OSHA penalties.

We're here to help. If you have any questions about OSHA fall protection training, inspections, or violations and penalties, please contact Benjamin Lowenthal or Philip Siegel. You can e-mail Benjamin by clicking here, and you can e-mail Philip by clicking here.

New Form I-9 Published

On January 31, U.S. Citizenship and Immigration Services (USCIS) released the latest version of the Form I-9. The new Form I-9 has a revision date of 10/21/2019. Use of the new Form I-9 is voluntary, and companies may continue to use the Form I-9 with a revision date of 07/17/17 N, through April 30, 2020. As of May 1, 2020, use of the new Form I-9 will be required. The fillable PDF version of the new Form I-9 can be accessed by clicking here . The unfillable, paper version can be accessed by clicking here . Instructions for the new Form I-9 may be accessed by clicking here .

Most of the changes made with the publication of the new Form I-9 are minor. For example, the instructions were revised to update the Department of Homeland Security's privacy notice and to provide clarifications on acceptable documents for Form I-9.

As companies begin to phase in use of the new Form I-9 before its effective date, now is as good a time as ever to conduct a self-audit of your Form I-9s for current employees. A self-audit helps avoid potential fines and other liabilities by identifying where corrections need to be made. If you are interested in conducting a self-audit of your Form I-9s, please contact Philip Siegel . You can e-mail Philip by clicking here . Philip has extensive experience conducting Form I-9 audits and assisting companies reduce or eliminate potential liability for civil fines and penalties.

Lessons to be Learned - Florida Roofing Contractor Faces $291,724.00 in Penalties for Repeated OSHA Fall Hazard Citations

We're here to help. If you have any questions about OSHA fall protection training, inspections, or violations and penalties, please contact Benjamin Lowenthal or Philip Siegel at (404) 522-1410 or e-mail Benjamin by clicking here and e-mail Philip by clicking here.

"Stay Bonus" Increases an Employee's "Regular Rate" for Purposes of Calculating Overtime Under FLSA

In an opinion letter issued January 7, 2020, the Department of Labor has provided guidance as to the proper method of calculating overtime payable to an employee pursuant to the Fair Labor Standards Act during a period of time in which the employee earned a "stay bonus".

The facts presented were these: an employer provides an incentive for its employees to complete a 10-week training course by providing a lump sum bonus of $3,000 to every employee who completes the 10 weeks of training and agrees to continue training for an additional eight weeks. The employee earns the bonus after completing the 10 weeks of training whether he or she actually finishes the additional eight weeks. The bonus is not discretionary if the employee completes the 10 weeks of training. During the 10 weeks of training, one particular employee worked 47 hours in one week and 48 hours in a second week. The employer asked DOL about the proper method for calculating the overtime payments due to the employee for those two weeks.

Because the bonus could not necessarily be identified with any particular workweeks, the question was whether the bonus should be treated as having been earned equally throughout the period (and so allocated equally among each week) or earned equally throughout the pay period (and so allocated equally among each hour of the pay period). DOL responded that where a bonus covers a period of longer than one week, and where it is impossible to allocate among the workweeks in proportion to the amount of the bonus that was actually earned, the employer may assume that the employee earned an equal amount of the bonus each week during the period. The alternative would be used (bonus allocated over each hour of the pay period) if there are facts which make it inappropriate to assume equal bonus earnings for each workweek.

In this case, the proper approach was to allocate the bonus equally over each week of the 10-week training period. Accordingly, the employee's "regular rate" for the 10-week period included an additional $300 (1/10 of the bonus amount), so that overtime pay was to be calculated for the two weeks in which the employee worked more than 40 hours based on that "regular rate" of pay. Note that if the bonus could not be appropriately assumed to be allocated equally across the workweeks involved, overtime pay could be required to be calculated on the basis of the bonus being allocated across each hour of the particular pay period.

In conclusion, employers need to be aware that such "stay bonuses" will cause overtime pay to be calculated at a higher rate than "normal", but that as long as it is appropriate to allocate the bonus across the "stay period", overtime does not have to be calculated by allocating the bonus solely to the hours of the pay period in which overtime was worked.

If you have any questions about the effect of bonuses and overtime pay, or other issues arising under the FLSA, please contact Philip Siegel via e-mail by clicking here, or Scott Calhoun by clicking here .

Not Understanding Compensable Travel Nets Iowa Construction Company $126,420 Back Wage Assessment

One of the more common employment law mistakes made by construction contractors is not understanding when the law says employees engaged in travel are actually working and are to be paid at least the applicable minimum wage for the time spent in such travel. If the employer requires its employees to report to the shop before heading out to the employees' assigned job sites, the employees' work day begins at the shop and the drive to the job site from the shop is compensable travel. Similarly, if the employees are required to report back to the shop at the end of the work day, the travel from the job site back to the shop is compensable travel pay and the time counts as hours worked. Apparently, this rule of law was lost on E & J Electric, based in Solon, Iowa and operating as both E & J Electric and E & J Geothermal.

E & J Electric was recently the subject of a wage and hour audit, the conclusion of which resulted in a back wage assessment totaling $126,420. The investigators for the Department of Labor found that one wage and hour violation committed by E & J Electric was its failure to pay employees for time spent in required travel returning to the employer's shop at the end of the workday.

E & J Electric was also found to have violated the Fair Labor Standards Act through its practice of offering its employees comp time in lieu of paying overtime pay. Unfortunately, the law does not allow private employers to avoid paying overtime pay by instead offering comp time. Again, lesson learned for E & J Electric.

The wage and hours encountered by E & J Electric are not uncommon. Philip Siegel often presents on the Top 10 Employment Law Mistakes Made by Construction Contractors. During this seminar, Philip assists contractors with avoiding the mistakes made by E & J Electric. If you are concerned about any aspect of your wage and hour practices, you can reach out to Philip for a consultation by e-mailing him here or calling him directly at (404) 469-9197.

A Reminder on the Importance of Notice and the Opportunity to Cure

In almost every construction contract, there are requirements imposed upon each party to provide notice to the other of certain events that may give rise to claims or other remedies for the breach of the parties' contract. Whether in relation to delays to the work, changes encountered, deficiencies in workmanship, or contentions of default, notice is a vital obligation of the parties to any construction contract because it gives the breaching party the opportunity to cure its breach. Indeed, the right of a breaching party to be given the opportunity to cure its own breach has been described as "an ancient equitable principle intended (1) to prevent forfeiture by termination, (2) to allow the breaching party to mitigate damages, (3) to avoid similar future deficiencies in performance, and (4) to promote the informal settlement of disputes." [1] Simply stated, providing notice and an opportunity to cure gives the parties an opportunity to resolve disputes through communication before the dispute escalates and more drastic actions are taken. Thus, even if the contract may not specifically call for providing notice in a specific situation, taking the conservative approach and providing notice under all circumstances is almost always the best course of action.

As an example of how lack of notice can impact a party's claims, in a recent arbitration, this firm was able to wholly defeat over $3 million in alleged backcharges by showing that the prime contractor had never provided notice and an opportunity to cure to the subcontractor before allegedly supplementing the subcontractor's work force and performing work on its behalf. Indeed, the arbitrators found (1) that the prime contractor had the obligation to provide notice and an opportunity to cure under the terms and conditions of the contract, (2) that the applicable law required the prime contractor to provide notice and opportunity to cure without regard to the terms of the subcontract, (3) that the duty of good faith and fair dealing gave rise to an obligation to provide notice and an opportunity to cure, and (4) that providing notice to a subcontractor of its alleged failure to perform under its subcontract and the opportunity to cure was accepted construction industry practice.

Clearly, the importance of providing notice cannot be overstated. Indeed, there is no good reason to forfeit rights or create liability for yourself by failing to take the simple step of communicating your concerns on a project to the other party in writing.

In addition to providing contract review and dispute resolution services, this firm is always available to advise in relation to on-going projects.

If you have any questions about this article or are in need of assistance with potential disputes on active projects, do not hesitate to contact J.T. Gallagher. You can e-mail J.T. by clicking here.

[1] Bruner and O'Connor on Construction Law, § 18:15, Principle of cure and its implication upon materiality.

DOL's Final Rule

Updating FLSA's Joint Employer Regulations

Goes into Effect March 16, 2020

After more than 60 years without a meaningful update to the regulations interpreting joint employer status under the Fair Labor Standards Act (FLSA), the Department of Labor (DOL) has published a final rule providing updated guidance for determining whether an employer may be a joint employer under the FLSA. This final rule amends part 791 of title 29 of the Code of Federal Regulations effective March 16, 2020. The intent of the revision is, among other things, to add certainty about the business practices that result in joint employer status, promote greater uniformity among court decisions, and improve the ability of employers to comply with the FLSA, which should in turn reduce employers' litigation costs.

A joint employer of an employee under the FLSA is jointly and severally liable with one or more other employers for compliance with all applicable provisions of the FLSA, including minimum wage and overtime provisions, for all the hours worked by the employee in a workweek. This means that, even if the employee is actually paid by another employer, the joint employer of a covered nonexempt employee must make sure that the employee is being paid at least the federal minimum wage of $7.25 per hour for all hours worked in each workweek and overtime pay of at least one and one-half times the employee's regular pay rate for any and all hours worked over 40 in each workweek. If the employee is not paid in accordance with the requirements of the FLSA, the joint employer will be liable.

So, how do you know if you are a joint employer? The updated DOL regulations provide guidance for determining joint employer status by explaining two joint employer scenarios under the FLSA and the factors to be considered under each.

Under the first scenario, a person/entity could be joint employer if the work of an employee who is actually employed by another employer simultaneously benefits the person/entity. In determining whether the benefitted person/entity is a joint employer under the FLSA, the DOL considers whether the person/entity: (1) hires or fire the employee; (2) substantially supervises and controls the employee's work schedule or conditions of employment; (3) determines the employee's rate and method of payment; and/or (4) maintains the employee's employment records. A potential joint employer's ability, power, or reserved right to act with respect to the employee in one or more of these four areas may be relevant but is not alone enough to demonstrate joint employer status; a potential joint employer must actually exercise control (directly or indirectly) in one or more of the four areas to be jointly liable under the FLSA.

Under the second scenario, if an employer employs an employee for one set of hours in a workweek and another employer employs the same employee for another set of hours in the same workweek, both employers could be joint employers under the FLSA. The employers of this same employee would not be considered joint employers if they are acting independently of each other and are disassociated regarding employment of the employee. If, however, the employers are "sufficiently associated" regarding the employee's employment, they would be joint employers under the FLSA. Employers are "sufficiently associated" if one or more of the following applies: (1) the employers have an arrangement to share the employee's services; or (2) one of the employers is acting directly or indirectly in the other employer's interest regarding the employee; or (3) the employers share control over the employee (directly or indirectly) due to the fact that one employer controls the other or the employers are under common control.

If you have any questions about the new joint employer regulations, do not hesitate to contact Leanne Prybylski. You can e-mail Leanne by clicking here.

Employee Spotlight:

Ed Stone

With each of our e-blasts going forward, we will be introducing you to a member of the HPSS Team! This month, meet Ed Stone.

What is your role/position at HPSS?

I am an attorney, primarily focusing on litigation on behalf of construction clients.

How long have you practiced law?

Twenty one years, or since 1999.

How does your occupation now line up with what you wanted to be when you were a child?

My career as an attorney does not line up at all with my dreams as a child, which mostly consisted of military adventurism and being an astronaut. I did serve in the military, but my calling as an attorney came to me later, as an adult. Life goals that come with more maturity are often more fulfilling.

Who is your all-time favorite musician/songwriter/entertainer?

This is a very difficult question for me to answer, as my musical tastes are broad and varied. With respect to classical music, the composer Wolfgang Amadeus Mozart, and, with respect to more modern music, Danny Elfman, the front man for Oingo Boingo and now a composer for the movie industry.

Outside of work documents, what's the last thing you read?

Marcus Aurelius: A Biography, by Anthony Birley. It is not a particularly good biography and not so well written, indeed, tedious, but it covers thoroughly a historical period in which I have an abiding interest.

Is your favorite leisure time spent indoors or outdoors?

Definitely outdoors. I enjoy camping, fishing, hiking, hunting, shooting, and canoeing. I often take my family along for these activities, which they enjoy as well. These activities make for good family time. The children went camping even as babies and toddlers, and the older children have a variety of outdoor and survival skills developed through experience.

Tell me about your family.

I am married to Leigh Ann, and we have four children, Eddie 18, Liam 16, Laura 6, and Max 3. We are a loving, close family, and have "game night" and "movie night" regularly. I always try to find time read to the two younger ones before bed, and they have developed a nightly habit of singing a few songs together before falling asleep.

Name the top 2 items on your bucket list.

First, to take up amateur car racing. Second, to go big game hunting in Africa, more specifically, to face a lion charge, hopefully successfully.

What is your proudest moment at HPSS?

This is also a very difficult question to answer, as HPSS has a great deal of interesting, challenging work and great clients with unique problems. Having to pick one moment, however, it would be winning a case on summary judgment for a contractor that was owed a significant amount of money from an unscrupulous contractor. This win meant that the subcontractor was able to collect what it was owed, including the attorneys fees incurred, without having to go through a trial.

How do you relieve yourself of the stress?

I do not find the job stressful, as I enjoy what I do. I enjoy solving problems for clients, and I enjoy litigating cases. Nevertheless, I find regular exercise to be a good reliever of stress, and if that fails, then (1) chainsawing a few trees from the backyard and splitting the wood for the fireplace or occasional bonfires or (2) shooting targets in the backyard both leave me feeling more relaxed and in a better mood.

HPSS News!

Stephen Phillips and Philip Siegel were recent speakers at this year's International Roofing Expo in Dallas, Texas. Stephen and Philip will also be presenting the National Roofing Contractors Association's LEGALCon 2020 in Rosemont, Illinois on March 12.

Philip will be presenting three separate educational sessions to the Sheet Metal, Air Conditioning & Roofing Contractors Association at its annual seminar in Las Vegas on February 28.

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