HPSS Construction Law News
GET FIRST-HAND LEGAL INSIGHT ON THE CONSTRUCTION INDUSTRY
|
|
OSHA'S Penalty Amounts Increase for 2023
On November 3, 2015, then 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. Importantly, the Act does allow OSHA to annually adjust the maximum penalty amounts to reflect inflation, similar to other government agencies.
For 2023, penalties for an other-than-serious violation, a serious violation, and a failure-to-abate violation increased to $15,625, which represents a $1,123.00 increase over these same penalties in 2022. Willful and repeat violations now have a maximum penalty amount of $156,259 per violation, which represents an increase of $11,232.00 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 the Biden administration promises increased enforcement efforts, 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 construction 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.
|
|
Be Sure to Comply with OSHA's Form 300A Posting Requirement
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.
Again this 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. Construction employers with 20 to 249 employees are subject to the rule and must electronically submit their 2022 300A Annual Summary to OSHA no later than March 2, 2023.
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.
|
|
Industry Groups Comment on Department of Labor's Proposed Misclassification Rule |
On October 13, 2022, the Department of Labor (“DOL”) published a Notice of Proposed Rule Making to revise the DOL’s guidance on how to determine whether a worker is an employee or independent contractor under the Fair Labor Standards Act. The proposed rule would rescind the prior rule implemented in January 2021 by the Trump Administration. The Trump Administration’s rule emphasized two “core factors” for primary consideration, (1) the nature and degree of the worker’s control over the work, and (2) the worker’s opportunity for profit and loss. The DOL’s proposed rule would return to the totality of circumstances test previously applied by the DOL. The DOL accepted public comment on the proposed rule through December 13, 2022 and several notable industry groups provided comment.
The Associated Builders and Contractors submitted comments opposing the proposed rule asserting that prior rule’s emphasis on the two “core” factors were paramount to making the independent contractor determination. Associated Builders and Contractors urged the DOL to withdraw the new proposed role and retain the prior final rule.
The Associated General Contractors of America also submitted comments opposing the proposed rule asserting that Trump Administration’s rule “adopted a consistent, clear and common-sense standard for determining independent contractor status under the FLSA.”
The American Subcontractors Association along with the Small Business Legislative Counsel submitted comments on the proposed rule that emphasized the need for flexibility in determining employee versus independent contractor status. The ASA took no specific stance on the economic realities test but asserted that the existing guidance created through years of developed case law makes using an economic realities test or one similar to it easier to navigate. The ASA and SBLC applauded the DOL for declining to adopt an ABC test that would require a stringent factor test and eliminate flexibility.
The comment period has closed and the rule making process will move forward with internal comment review as the DOL moves towards a final rule. HPSS will continue to monitor the rulemaking process and provide updates as new information is received.
|
|
FTC Proposes Rule to Ban Noncompete Clauses
On January 5, 2023, the Federal Trade Commission (“FTC”) proposed a new rule that would impose a nationwide ban on noncompete clauses between employers and employees. The proposed rule, if enacted, would not only ban all future noncompete clauses, but would retroactively make any previous noncompete clauses between employers and employees unlawful. By the FTC’s own estimates, the proposed rule would impact one in five American workers. The FTC is currently accepting comments on the proposed rule through March 6, 2023. You can view the FTC’s overview and summary of the proposed rule, as well as submit comments, here.
The impact on employers, if the proposed rule goes in to effect, would be monumental. All employers would have to rescind existing noncompete clauses, meaning that all employment agreements containing noncompete clauses would have to be revised. On top of that, the proposed rule would obligate employers to give notice to employees that the noncompete clause is no longer in effect. And the proposed rule would be nationwide in scope and would apply to almost all private employers, regardless of size or location.
State law has historically been the principal authority governing the enforceability of noncompete clauses, which is a contractual term between an employer and employee that prevents the employee from working with a competitor in a specified geographic area for a fixed period of time after the worker’s employment ends. Noncompete clauses are a means for an employer to protect confidential information and trade secrets from getting to competitors. Currently, breaches of noncompete clauses can give rise to claims for money damages and injunctive relief by the employer. Noncompete clauses are widely used and have been upheld by courts around the country. As a general rule, courts subject noncompete clauses to stricter scrutiny than other contract terms because they are considered a restraint on trade. States vary on how they treat noncompete clauses. Most states generally enforce noncompete clauses, with the exception of California North Dakota, and Oklahoma.
The proposed rule is now in a 60-day notice and comment period. After the comment period ends, the FTC will likely adopt a final rule banning noncompete clauses. Undoubtedly, multiple legal challenges to the rule will be made. Ultimately, the issue may go to the U.S. Supreme Court. In the meantime, however, employers who use noncompete clauses need to be aware that the clauses may become unlawful in the not-too-distant future and be prepared to comply with any notice requirements that the FTC puts in place.
If you have any questions regarding the FTC’s proposed rule to ban noncompete clauses, please do not hesitate to reach out to Philip Siegel or Ben Lowenthal. You can e-mail Philip and Ben by clicking here.
|
|
Significant Minimum Wage Increases for 2023
The new year brings with it significant increases in minimum wage rates in 23 states. Many of these increases are due to scheduled measures designed to move the minimum wage toward $15 per hour. Other increases have been brought about by the effects of inflation on annual adjustments tied to CPI. At least four additional states are scheduled to increase minimum wage rates later in the year.
For contractors and other employers with employees in multiple states, care should be taken to be sure that the minimum wage law of each particular state is followed. In certain locations, cities and counties impose their own minimum wage rates, many of which are also increasing. The additional administrative efforts required to ensure compliance make the process of finding and keeping good employees even more difficult, when added to the effects of the tight job market. Political pressures and economic forces will only continue to exert upward pressure on wages.
If you have any questions about the effects of minimum wage rate increases or other labor compliance issues, please contact either Philip Siegel or Scott Calhoun. You can e-mail them both by clicking here.
|
|
Temporary Inflation Relief Provided by the Enactment of The National Defense Authorization Act for Fiscal Year 2023
On December 23, 2022, President Biden signed into law the National Defense Authorization Act for Fiscal Year 2023 (“NDAA” or “the Act”). As in prior years, the 2023 NDAA authorizes appropriations for the current fiscal year and outlines the budget, expenditures, and policies of the U.S. Department of Defense (“DOD”).
The Act includes a wide range of policy changes and regulatory updates that will significantly affect the government contracting sector. Notably, Section 822 of the Act amends 50 U.S.C. § 1431 and broadens the President’s authority to empower departments and agencies that exercise functions in connection with the national defense “to enter into contracts or into amendments or modifications of contracts heretofore or hereafter made … without regard to other provisions of law relating to the making, performance, amendment, or modification of contracts, whenever … such action would facilitate the national defense.” Additionally, Subsection (b) temporarily grants the DOD discretionary authority to amend or modify contracts based on the impact of inflation. Indeed, the NDAA may provide a measure of respite to contractors experiencing increased costs as a result of recent economic inflation—even those performing fixed-price contracts.
Under the NDAA, prime contractors can request an amendment or modification to their contract price when, due solely to economic inflation, the cost of performing that contract is greater than the price of such contract. Subcontractors can also submit a request for an amendment or modification based on the same inflation criteria, but only if a prime contractor does not make an amendment or modification request. The Act aims to simplify the process by which contractors can access this relief. In particular, Section 822 raises the applicable threshold for secretarial- level approvals from $50,000 to $500,000; and for approvals without congressional notice from $25,000,000 to $150,000,000.
Critically, although Section 822 authorizes relief for contractors experiencing higher costs resulting from economic inflation, the Act itself does not appropriate funding for such relief. In fact, the NDAA does not specify which contractors are eligible or how eligible contractors should apply for relief. What we do know is that the discretionary authority granted to the DOD under Section 822 is effective only from December 23, 2022, to December 31, 2023. Fortunately, the Act requires that the Office of the Under Secretary of Defense for Acquisition and Sustainment (“OASD A&S”) issue the necessary guidance for implementation of Section 822 within 90 days after the Act’s enactment.
We will continue to monitor developments relating to the NDAA and look forward to seeing the OASD A&S’ guidance. If you have any questions about the NDAA, please contact Juan Rodriguez. You can e-mail Juan by clicking here or by calling him directly at (404) 469-9183.
|
|
|
|
|
|
|
