Tishman Construction Admits Cheating Trade Center Clients
December 17, 2015 —
Erik Larson – BloombergTishman Construction Corp., builder of One World Trade Center in New York’s financial district, admitted to an overbilling scheme spanning a decade and agreed to pay $20 million in restitution and penalties.
The scam included the World Trade Center project, the renovation of the landmark Plaza Hotel on 5th Avenue and the expansion of the Javits Convention Center in Manhattan, the U.S. Attorney’s Office in Brooklyn, New York, said Thursday.
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Erik Larson, Bloomberg
An Overview of the New EPA HVAC Refrigerant Regulations and Its Implications for the Construction Industry
September 30, 2024 —
Stefanie A. Salomon, Nadia Ennaji & Ali Heyat - Peckar & Abramson, P.C.The U.S. Environmental Protection Agency (EPA) recently announced a series of significant changes to the rules governing the use of refrigerants in heating, ventilation, and air conditioning (HVAC) systems. These changes, which were promulgated under the American Innovation and Manufacturing (AIM) Act, are designed to phase down the use of hydrofluorocarbons (HFCs), a class of potent greenhouse gases.
The AIM Act: A Game-Changer for HVAC Industry
The recent changes to refrigerant regulations by the EPA signify a substantial shift in environmental policy that will have profound implications for the construction industry. For the construction industry, this means a transition to next-generation technologies that do not rely on HFCs. The AIM Act’s sector-based restrictions will affect a wide range of equipment, including refrigeration and air conditioning systems integral to building design and function.
Starting January 1, 2025, the manufacturing or importing of any product in specified sectors that uses a regulated substance with a global warming potential of 700 or greater is prohibited (40 C.F.R. § 84.54(a)). The specified sectors listed include R-410A, the most common refrigerant used in the HVAC industry. The installation of systems using a regulated substance with a global warming potential of 700 or greater in specified sectors is allowed until January 1, 2026, provided that all system components are manufactured or imported before January 1, 2025. See 40 C.F.R. § 84.54 (c). “Installation” of an HVAC system is defined as the completion of assembling the system’s circuit, including charging it with a full charge, such that the system can function and is ready for its intended purpose. See 40 C.F.R. § 84.52.
Reprinted courtesy of
Stefanie A. Salomon, Peckar & Abramson, P.C. and
Nadia Ennaji, Peckar & Abramson, P.C.
Ms. Salomon may be contacted at ssalomon@pecklaw.com
Ms. Ennaji may be contacted at nennaji@pecklaw.com
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AB 1701 Has Passed – Developers and General Contractors Are Now Required to Double Pay for Labor Due to Their Subcontractors’ Failure to Pay
October 19, 2017 —
Clayton T. Tanaka – Newmeyer & Dillion LLPOn September 13, 2017, the California State Legislators passed a bill that would make developers and general contractors responsible for subcontractors who fail to pay their employees even though they already paid the subcontractors for the work. Assembly Bill 1701 (AB 1701), sponsored by unions who represent carpenters and other building trades, would require general contractors to “assume, and [be] liable for . . . unpaid wage, fringe or other benefit payment or contribution, including interest owed,” which subcontractors owe their employees. Despite vehement opposition from the California Building Industry Association and the Associated General Contractors of California, this bill has been submitted to the Governor and is expected to be signed into law.
NEW REQUIREMENTS
Once signed, this bill would impose the following requirements under Labor Code section 218.7:
- Applies to All Private Works Contracts That Are Entered Starting January 1, 2018.
For private works contracts entered on or after January 1, 2018, a “direct contractor” (i.e., prime contractor or contractor who has direct contractual relationship with an owner) must assume and be liable for any debt which its subcontractor or a lower tier subcontractor incurs “for [a] wage claimant’s performance of labor included in the subject of the contract between the direct contractor and the owner.” (Lab. Code, § 218.7, subds. (a)(1) and (e).)
- The Labor Commissioner and Joint Labor-Management Cooperation Committees May Bring Action to Recover Unpaid Wages on Behalf of Wage Claimants.
The California Labor Commissioner and joint Labor-Management Cooperation Committees established under the federal Labor Management Cooperation Act of 1978 (29 U.S.C. § 175a) (typically comprised of labor unions and management) may bring a civil action against the direct contractor for unpaid wages owed to a wage claimant. (Lab. Code, § 218.7, subds. (b)(1) and (3).) The Labor Commissioner may also bring its claims through administrative hearings (Labor Code section 98) or by citations (Labor Code section 1197.1). (Lab. Code, § 218.7, subd. (b)(1).)
- Third Parties That Are Owed Fringe or Other Benefit Payments or Contribution on Behalf of Wage Claimants (Labor Unions) May Bring Action.
Third parties who are owed fringe or other benefit payments or contributions on a wage claimant’s behalf (e.g., labor unions) may bring a civil action against the direct contractor for such unpaid benefit payments or contributions. (Lab. Code, § 218.7, subd. (b)(2).)
- It Does Not Confer Wage Claimants With Any Right to Sue Direct Contractors.
AB 1701 gives the Labor Commissioner, Labor-Management Cooperation Committees and the unions standing to bring an action against the direct contractor, but it does not confer any private right of action by the wage claimants against the direct contractor.
- Labor-Management Cooperation Committees and Labor Unions Shall Recover as Prevailing Plaintiffs Their Attorneys’ Fees and Costs, Including Expert Fees.
For actions brought by Labor-Management Cooperation Committees or labor unions, “[t]he court shall award a prevailing plaintiff in such an action its reasonable attorney’s fees and costs, including expert witness fees.” (Lab. Code, § 218.7, subds. (b)(2)-(3).)
- Direct Contractor’s Property May Be Attached to Pay for Judgment.
AB 1701 authorizes the attachment of direct contractor’s property to pay for any judgment that is entered pursuant to this section. (Lab. Code, § 218.7, subd. (c).)
- One-Year Statute of Limitation to Bring Action under This Section.
Actions brought pursuant to this section must be filed within one year of the earliest of: (1) recordation of a notice of completion of the direct contract; (2) recordation of a notice of cessation of the work covered by direct contract; or (3) actual completion of work covered by direct contract. (Lab. Code, § 218.7, subd. (d).)
- Rights to Receive Payroll Records and Project Award Information from Subcontractors and to Withdraw All Payments Owed for Their Failure to Comply.
Upon the direct contractor’s request, subcontractors and lower tier subcontractors must provide payroll records and project award information. (Lab. Code, § 218.7, subds. (f)(1)-(2).) Direct contractor may withhold as “disputed” all sums owed if a subcontractor does not timely provide the requested records and information without specifying what is untimely and such failure to comply does not excuse direct contractor from any liability under this section. (Lab. Code, § 218.7, subds. (f)( 3) and (i).)
- Rights to Receive Payroll Records and Project Award Information from Subcontractors and to Withdraw All Payments Owed for Their Failure to Comply.
Upon the direct contractor’s request, subcontractors and lower tier subcontractors must provide payroll records and project award information. (Lab. Code, § 218.7, subds. (f)(1)-(2).) Direct contractor may withhold as “disputed” all sums owed if a subcontractor does not timely provide the requested records and information without specifying what is untimely and such failure to comply does not excuse direct contractor from any liability under this section. (Lab. Code, § 218.7, subds. (f)( 3) and (i).)
- Further Legislative Efforts on Subdivision (h) Are Expected in 2018.
Subdivision (h), which states that “[t]he obligations and remedies provided in this section shall be in addition to any obligations and remedies otherwise provided by law . . .” (emphasis added) is potentially misleading since the author and sponsor of the bill have indicated that the bill is not intended to punish direct contractors with liquidated damages or penalties. As such, further legislative efforts on subdivision (h) are expected in 2018.
ADDITIONAL CONSIDERATIONS
While workers should be paid for the work they perform, AB 1701 would place undue burden on general contractors to monitor their subcontractors’ payroll, confirm that all wages and benefits are paid timely and withhold disputed payments from non-compliant subcontractors. General contractors would also need to caution against the chain reaction that could result from such withholding, including work stoppage, increased change order requests, and an overall increase in construction costs. Finally, general contractors would need to brace themselves for at least a year after project completion against any union or a Labor-Management Cooperation Committee actions armed with a prevailing party’s right to recover attorneys’ fees and expert fees, for previously unidentified subcontractor or sub-subcontractor workers.
STRATEGIES DEVELOPERS AND GENERAL CONTRACTORS SHOULD LOOK FOR
In anticipation of AB 1701 being signed into law and its potentially harsh effects, developers and general contractors are advised to consult their attorneys for a review and revision of their existing contracts, to develop plans for accessing and monitoring subcontractor payroll records, and to consider strategies for mitigating claims that may be brought against them, as follows:
- Execute all pending agreements
before January 1, 2018 to avoid the effects of AB 1701;
- Include an audit provision
requiring subcontractors and sub-subcontractors to provide payroll records (at minimum, information set forth in Labor Code section 226) and project award information, regularly and/or upon request, with specific deadlines for such production, as subdivision (f) does not specify what is untimely;
- Include defense and indemnity provisions
that would require subcontractors to defend and indemnify the general contractor for claims that are brought pursuant to this section arising from labor performed by employees for subcontractors and sub-subcontractors, and require subcontractors to include a similar provision in their own contracts with sub-subcontractors that would require lower tier subcontractors to also defend and indemnify the general contractor for claims arising from their respective employees’ work;
- Require subcontractors to provide a payment bond and/or a letter of credit
to satisfy claims that are made against the general contractor under this section;
- Require personal guarantees
from owners, partners or key subcontractor personnel;
- Include withholding and back-charge provisions
that would allow general contractors to withhold or charge back the subcontractors for disputed amounts, for claims brought against them, and for failure to comply with the audit, bond, and guarantee requirements.
- Consider implementing a system to confirm evidence of payments,
such as signed acknowledgment of payment by each subcontractor and sub-subcontractor employees and by third parties entitled to recover fringe and other benefit payments or contribution, possibly working with electronic billing software providers to implement such system.
Clay Tanaka is a partner in the Newport Beach office of Newmeyer & Dillion, focusing on construction, real estate, business and insurance disputes in both California and Nevada. As a licensed civil engineer, Clay has significant experience in design and construction of all types of construction projects, which he has effectively utilized in his litigation, trial and arbitration practice to obtain great results for his clients. For questions related to AB1701, please contact Clay Tanaka (clay.tanaka@ndlf.com) or Newport Beach Partner Mark Himmelstein (mark.himmelstein@ndlf.com).
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Clayton T. Tanaka, Newmeyer & Dillion LLPMr. Tanaka may be contacted at
clay.tanaka@ndlf.com
Examining Best Practices for Fire Protection of Critical Systems in Buildings
July 16, 2023 —
Jon Jones - Construction ExecutiveProtecting building occupants and first responders is critically important when designing and constructing commercial buildings. The National Fire Protection Association (NFPA), devoted to eliminating death, injury, property and economic loss from fire, electrical and related hazards, was formed in 1896. Shortly afterward, in 1897, the National Electrical Code (NEC) was established to standardize electrical safety for wiring, alarms and related equipment. Since the birth of these two important standardizing organizations, fire codes have been constantly modified to meet the changing safety needs of new infrastructure.
In 1996, the NEC identified key circuits for fire survivability, including emergency systems, fire pumps and fire alarms. Per the 1996 code, these circuits needed to be able to survive for one hour in case of fire. However, in the late 1990s and early 2000s, these requirements began to shift to demand two hours of survivability.
Reprinted courtesy of
Jon Jones, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Now Available: Seyfarth’s 50 State Lien Law Notice Requirements Guide (2023-2024 Edition)
December 23, 2023 —
Seyfarth Shaw LLPSeyfarth’s Construction team is pleased to announce the release of our 2023-2024 edition of the 50 State Lien Law Notice Requirements Guide. The Guide provides the general time requirements for filing lien notices in each state, plus Washington, DC.
Reprinted courtesy of
Seyfarth Shaw LLP
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What ENR.com Construction News Gained the Most Views
January 09, 2023 —
C.J. Schexnayder - Engineering News-RecordAs the construction industry continued its ongoing recovery from the global pandemic in 2022, it also faced a number of formidable challenges—including staffing gaps, materials shortages, supply chain delays and the ongoing specter of inflation. Throughout the year, ENR editors reported on how these issues—and many more—were impacting the sector and how it responded.
Reprinted courtesy of
C.J. Schexnayder, Engineering News-Record
Mr. Schexnayder may be contacted at schexnayderc@enr.com
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Rights Afforded to Employees and Employers During Strikes
October 16, 2018 —
Wally Zimolong - Supplemental ConditionsOne of the most powerful weapons in labor’s arsenal is a strike. Like most powerful weapons there is a dichotomy in a strike. On one hand, it can bring about concessions from management that labor seeks. On the other hand, it can permanently change the relationship between management and labor. However, one thing is certain, strike are – to put it mildly – chaotic.
During this chaotic period, employees and employers may wonder what rights they have during union-initiated strikes. We provide some brief explanations below, along with how union litigation can help enforce your rights.
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
Florida Appeals Court Rules in Favor of Homeowners Unaware of Construction Defects and Lack of Permits
December 09, 2011 —
CDJ STAFFThe Florida Court of Appeals has ruled that a homeowner is not liable for defects in unpermitted alterations, reversing a lower court’s decision in Jensen v. Bailey. The Jensens sold their house to the Baileys. During the sale, the Jensens filled out a property disclosure statement, checking “no” to a question about “any improvement or additions to the property, whether by your or by others that have been constructed in violation of building codes or without necessary permits.”
After moving in, the Baileys discovered several problems with the home. One involved a defective sewer connection leading to repeated backups. The Baileys also found problems with remodeling the Jensens had done in the kitchen, master bath, and bedroom. The remodeling work was not done with required permits nor was it up to code.
The court noted that an earlier case, Johnson v. Davis, established four criteria: “the seller of a home must have knowledge of a defect in the property; the defect must materially affect the value of the property; the defect must not be readily observable and must be unknown to the buyer; and the buyer must establish that the seller failed to disclose the defect to the buyer.” The court found that the first of these criteria was crucial to determining the case.
In the Johnson ruling, the then Chief Justice dissented, fearing that the courts “would ultimately construe Johnson’s requirement of actual knowledge to permit a finding of liability based on constructive knowledge,” quoting Justice Boyd, “a rule of constructive knowledge will develop based on the reasoning that if the seller did not know of the defect, he should have known about it before attempting to sell the property.” The Appeals Court concluded that the lower court hit this point in ruling on Jensen v. Bailey.
Citing other Florida cases, the court noted that the Johnson rule does require “proof of the seller’s actual knowledge of the defect.” The court cited a case in which it was concluded that the seller “should have known” that there was circumstantial evidence was that the seller did know about the defects, as the seller had been involved in the construction of the home.
In the case of the Jensens, the lower court concluded that they did not know that the work was defective, nor did they know that they were obligated to obtain permits for it. The Appeals Court found this one fact sufficient to reverse the decision and remand the case to the lower court for a final judgment in favor of the Jensens.
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