Wisconsin Supreme Court Abandons "Integrated Systems Analysis" for Determining Property Damage
September 12, 2023 —
Tred R. Eyerly - Insurance Law HawaiiThe Wisconsin Supreme Court departed from its previous mechanism for determining property damage under the "integrated systems analysis" and found the insurers were not entitled to summary judgment as determined by the trial court. 5 Walworth, LLC v. Engerman Contracting, Inc., 2023 Wis. LEXIS 152 (Wis. June 20, 2023).
5 Walworth LLC hired Engerman as general contractor to construct a swimming pool complex. Engerman subcontracted with Downes Swimming Pool Co., Inc. to construct the pool complex. Otto Jacobs supplied Downes with a ready-mixed concrete called shotcrete, commonly used in swimming poll construction.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Surfside Condo Collapse Investigators Have Nearly Finished Technical Work
March 11, 2024 —
James Leggate - Engineering News-RecordNewly analyzed evidence in the investigation into the June 2021 partial collapse of Champlain Towers South that killed 98 people in Surfside, Fla., shows that the pool deck collapsed more than four minutes before the tower itself. But investigators are still working to determine the initiating event, and aim to finish their technical work this summer.
Reprinted courtesy of
James Leggate, Engineering News-Record
Mr. Leggate may be contacted at leggatej@enr.com
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How AB5 has Changed the Employment Landscape
March 16, 2020 —
Jason Morris – Newmeyer DillionAs a result of California's Assembly Bill 5, effective January 1, 2020, the California Supreme Court's ABC test is now the standard for evaluating independent contractor classifications for purposes of the Industrial Welfare Commission Wage Orders, California Labor Code, and the California Unemployment Insurance Code. That dramatically ups the ante for companies that rely on independent contractors, particularly those that have not re-evaluated such classifications under the ABC test.
Misclassification cases can be devastating, especially for misclassified non-exempt employees, and can result in minimum wage violations, missed meal and rest periods, unpaid overtime, unreimbursed business expenses, record-keeping violations, steep penalties, attorneys' fees, and even criminal liability, among other consequences. Misclassifying workers creates enormous risks for companies and is fertile ground for class actions and representative actions under the Private Attorneys General Act (PAGA).
The Costs Of Misclassification Are Expensive, And Hope Is Not A Strategy
Many business owners I speak to understand AB5 has caused the ground to shift beneath their feet and recognize the resulting risks of misclassifying workers. Despite these risks, companies often balk at taking the necessary steps to evaluate their classifications and mitigate the risk of an adverse classification finding.
The most common reason I hear from resistant companies is the worker does not want to be reclassified as an employee and the company trusts the worker ("I've worked with her for years; she won't sue me because she wants to be a contractor"). I get it. Making the change from contractor to employee results in less flexibility and greater administrative burden for everyone involved. While I'm sympathetic, the government is not. Reluctance to change while acknowledging the associated risks amounts to a strategy based on hope. As we say in the Marine Corps, however, "hope is not a strategy."
Aside from the sometimes foolhardy belief that a misclassified worker can be trusted to not file suit after a business breakup (when the deposits stop and mortgage bill comes due, guess who's a prime target), companies often fail to recognize the numerous ways in which their classification decisions can be challenged even when they are in agreement with their (misclassified) contractors. Here are just three examples of how your classifications can be scrutinized despite the lack of a challenge by the worker:
- Auto Accidents: Whether delivering products, making sales calls, or traveling between job sites, independent contractors often perform work that requires driving. Of course, sometimes drivers are involved in automobile accidents. When accidents happen, insurance companies step in and look for sources of money to fund claims, attorneys' fees, costs, and settlements. One potential source is your insurance. "But the driver isn't my employee!," you say. You better buckle up because the other motorist's insurance carrier is about to challenge your classification in an attempt to access your insurance policies.
- EDD Audits: During the course of the last several years, the California Employment Development Department (EDD) has increased the number of verification (random) audits it performs in search of additional tax revenue. One reason government agencies prefer hiring entities classifying workers as employees rather than independent contractors is it's a more efficient tax collection method; employers collect employees' taxes on the government's behalf, which increases collection rates and reduces government collection costs. The consequences of misclassification include pricey fines, penalties, and interest.
- Unemployment Insurance, Workers' Compensation, and Disability Claims: In addition to verification audits, the EDD performs request (targeted) audits. Targeted audits may result when a contractor files an unemployment insurance, workers' compensation, or disability claim because independent contractors are ineligible for such benefits. Request audits, like verification audits, can result in costly fines, penalties, and interest if the EDD concludes you have misclassified your workers. Even so, that may not be the worst of it: the EDD often shares its findings with the Internal Revenue Service.
Your Action Plan
AB5 has changed the measuring stick, misclassification costs are high, and you do not have complete control of when the government or others can challenge your classifications. So what can you do? Here are several steps all prudent companies should take if they are using independent contractors:
- Conduct an audit of current classification practices;
- Review written independent contractor agreements;
- Implement written independent contractor agreements;
- Update workplace policies;
- Update organizational charts;
- Reclassify independent contractors as employees if necessary.
Jason Morris is a partner in the Newport Beach office of Newmeyer Dillion. Jason's practice concentrates on the areas of labor and employment and business litigation. He advises employers and business owners in employment litigation, as well as advice and counsel related to employment policies and investigations. You can reach him at jason.morris@ndlf.com.
About Newmeyer Dillion
For 35 years, Newmeyer Dillion has delivered creative and outstanding legal solutions and trial results that achieve client objectives in diverse industries. With over 70 attorneys working as a cohesive team to represent clients in all aspects of business, employment, real estate, environmental/land use, privacy & data security and insurance law, Newmeyer Dillion delivers holistic and integrated legal services tailored to propel each client's success and bottom line. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California and Nevada, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949.854.7000 or visit www.newmeyerdillion.com.
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Perrin Construction Defect Claims & Trial Conference
June 11, 2018 —
Beverley BevenFlorez-CDJ STAFFRichard Glucksman, Esquire, Partner of the Los Angeles firm Chapman Glucksman Dean Roeb & Barger, will be moderating the panel, “Green Building/LEED: An Overview and Claims Discussion” at the Perrin Construction Defect Claims & Trial Conference in Las Vegas, Nevada. The panel will be discussing the following topics:
- Risk and claims case studies including solar and SIPs (Structural Insulated Panels)
- Green Building/LEED and The Law: Review of National Claims/Lawsuits
- AIA Documents for Sustainable Projects
Thursday, June 21st, 2018
Four Seasons Hotel
3960 S Las Vegas Blvd
Las Vegas, NV 89119
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Oregon Construction Firm Sued for Construction Defects
July 31, 2013 —
CDJ STAFFHome Forward, the housing authority in Multnomah County, Oregon, is suing Tom Walsh & Company over allegations of construction defects in low-income housing projects the firm built for the county. Walsh’s firm was hired about ten years ago to construct apartments in Portland and adjacent Gresham. But the housing authority claims that the buildings are suffering water damage.
The authority requested that Tom Walsh & Company repair the problems. Walsh claimed that the problems were not due to construction defects, but to the agency’s failure to maintain the properties.
Home Forward has gone forward with lawsuits of a combined $3.8 million. If the case goes to trial, according to Walsh, it will be only the second time for him in 50 years of business.
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N.J. Governor Signs Bill Expanding P3s
September 04, 2018 —
Nick Steingart - Construction ExecutiveGovernment entities in New Jersey that enter into public-private partnerships to help finance public construction projects are now required to utilize a project labor agreement (PLA) and pay state prevailing wages, among other requirements. Previously, P3s were only available to state and county colleges, but did not contain prevailing wage or PLA mandates.
The new law, Senate Bill 865, allows the state and its subdivisions, including counties, municipalities and school districts, to enter into agreements with private funding sources provided they follow the additional mandates such as abiding by the state’s prevailing wage law and utilizing a union-only PLA for construction of the project.
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Nick Steingart, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Steingart may be contacted at
steingart@abc.org
N.J. Appellate Court Confirms that AIA Construction Contract Bars Insurer's Subrogation Claim
September 10, 2019 —
Saxe Doernberger & Vita, P.C.On April 4, 2019, the Appellate Division of the New Jersey Superior Court confirmed that the waiver of subrogation provision in a commonly used form construction contract, American Institute of Architects (AIA) form A201 — 2007 General Conditions of the Contract for Construction, precluded an insurer’s claims against a subcontractor.
In Ace American Ins. Co. v. American Medical Plumbing, Inc., the court considered Ace American Insurance Company’s (Ace) subrogation claim against a plumbing subcontractor who was allegedly responsible for a water main leak that caused approximately $1.2 million in damages to Ace’s insured, Equinox Development Corporation (Equinox).
In March 2012, Equinox entered into a contract with Grace Construction Management Company, LLC (Grace) to build the “core and shell” of a new health club. Equinox and Grace used AIA form A201 for their contract. Grace then hired American Medical Plumbing, Inc. (American) as a plumbing subcontractor for the project. In April 2013, the water main failed, flooding the health club.
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Saxe Doernberger & Vita, P.C.Saxe Doernberger & Vita, P.C. may be contacted at
coverage@sdvlaw.com
Slow Down?
December 03, 2024 —
Daniel Lund III - LexologyAbsolutely not, said the Louisiana Fifth Circuit Court of Appeal to a masonry subcontractor being sued for allegedly improperly refusing to honor a subcontract bid.
A general contractor preparing its overall bid for a public project in Jefferson Parish relied in the process on the defendant masonry subcontractor’s bid. After a public bid process and receiving the award of the project, the general contractor was informed by the subcontractor that it believed that the unit price form that had been supplied to the sub “contained inaccuracies.” Notwithstanding offers by the GC to endeavor to address the purported “inaccuracies” during the project, most likely by a change order, the subcontractor refused to execute its subcontract. The general contractor then awarded the masonry work to another subcontractor for $368,222 more than the original sub’s bid.
The GC filed suit – for recovery of $368,222 – against the defendant subcontractor during the course of the public project. The defendant sub objected, arguing to the court that the lawsuit was “premature.” At the heart of the prematurity argument: the sub urging that the general contractor filed suit before its right to recover damages had accrued.
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Daniel Lund III, PhelpsMr. Lund may be contacted at
daniel.lund@phelps.com
