California Court of Appeal Confirms the Power of Subcontractors' Bid Conditions

General contractor Flintco Pacific, Inc. (“Flintco”) bid to construct a new building at Diablo Valley College (“DVC”) in Pleasant Hills, California. TEC Management Consultants, Inc. (“TEC”) submitted a written bid to Flintco to perform glazing work for $1,272,090. TEC’s bid contained several pre-conditions that Flintco’s subcontract with TEC would have to meet, otherwise TEC retained the right to withdraw its bid.  DVC awarded the job to Flintco, and Flintco sent to TEC a letter of intent to enter a subcontract with TEC.  However, Flintco’s attached subcontract failed to include any of TEC’s conditions, and Flintco refused to include them after TEC requested that they be added to the subcontract.  TEC therefor refused to enter Flintco’s subcontract. Read More ›

Investigating and Resolving Incidents of Sexual Harassment

As we discussed in our last edition of Common Sense Contracting, the first and most important step to avoid sexual harassment claims is to create a work environment where sexual harassment is not allowed. This can be done through a combination of written policies, employee and supervisor training, and management’s active and ongoing promotion of a healthy, respectful workplace. These steps will substantially reduce but can never totally eliminate the possibility of a sexual harassment claim. For that reason, it is also important to understand and implement good procedures for investigating and resolving harassment claims.  Read More ›

Protect Your Employees from Sexual Harassment - Protect Your Company from Unnecessary Claims

As with most of the employment law issues we have been discussing in recent issues, claims of sexual harassment and retaliation can result in substantial damage to your company, both in dollars and in employee morale. To protect both your employees and your company, it is important to be familiar with the best practices for preventing sexual harassment, and the best way to handle any sexual harassment claims that may arise. This article will explore the two types of sexual harassment claims, as well as some steps that employers can take to foster a dynamic, functional, and respectful workplace environment. In our next issue, we will discuss how best to investigate and resolve claims of sexual harassment and avoid claims for retaliation. Read More ›

An Outline of Some Surprising New SBA Rules that Significantly Affect Both Large and Small Federal Contractors

The Small Business Administration (SBA) has just amended its regulations in several important respects.  While somewhat of a tangle, these amendments contain things that benefit large businesses as well as small ones that contract with the federal government. Read More ›

Davis-Bacon Act Compliance

Federal government construction contracting is a highly regulated business. One of the major challenges facing any government construction contractor is compliance with Davis-Bacon Act’s requirement to pay prevailing wages. Read More ›

Wrongful Termination Lawsuits

Employment is generally presumed to be “at will” absent contract terms to the contrary. Such a presumption enables both the employer and the employee to terminate the work relationship at any time, for any reason. “Employment at Will” allows employees to take employment without an obligation to stay for a specific duration of time, unless a contract expressly states a minimum employment period. Because employees are free to leave a job whenever they please, employers are also permitted to terminate employees whenever they desire, so long as the law does not prohibit the termination. But termination of an at-will employee may be prohibited by statute or by public policy and thus become wrongful. Read More ›

Best Practices for Fair Labor Standards Act Compliance

In addition to making wise and profitable business decisions, those in the construction industry should take care to fully comply with the requirements of the Fair Labor Standards Act. The Department of Labor has targeted the construction industry in particular for Fair Labor Standards Act violations related to pay practices and record keeping. Such violations may lead to hefty fines and assessments for general contractors and subcontractors. In order to avoid costly Fair Labor Standards Act violations, construction industry employers should prioritize record keeping and improve pay practices in compliance with Fair Labor Standards Act regulations. Several best practices for contractors and other construction industry employers are suggested below as a start to Fair Labor Standards Act compliance. Read More ›

Small Business Administration (SBA) Publishes Final Rule Implementing the National Defense Authorization Act of 2013

On May 31, 2016, the Small Business Administration (SBA) published a final rule amending its regulations implementing the National Defense Authorization Act (NDAA) of 2013.  The full rule can be found in the Federal Register at 81 Fed. Reg. 32,451.  The new rule became effective on June 30, 2016.  For construction contractors, the major changes covered by the final rule include significant modifications to the rules for Limitations on Subcontracting, revisions to the rules regarding affiliation, joint ventures and size protests, and small, but important, revisions to the rules regarding small business subcontracting plans. Read More ›

A Flimsy Facade Provides No Shelter: Personal Liability and the Project Architect - What is Meant by "Piercing the Corporate Veil?"

As a legal precept, officers and/or shareholders of a corporation cannot be liable to third parties for the acts of the corporation, which is an entity distinct from its stockholders/officers, even where one individual owns all of the corporation’s stock.  In limited circumstances, however, a court will find that it is appropriate to disregard the corporation, so as to hold a shareholder or officer liable for the corporation's acts or obligations.  As the U.S. Supreme Court succinctly stated, “The limited liability sought to be obtained through organization of a corporation may be denied where the sacrifice is essential to the end that some accepted public policy may be defended or upheld.” Anderson v. Abbott, 321 U.S. 349 (1944).  When this happens it is commonly referred to as “piercing the corporate veil.” Read More ›

Misclassifying Workers as Independent Contractors: A Costly Mistake

Construction companies must be aware of the difference between employees and independent contractors. State and federal agencies are increasingly targeting the misclassification of workers in the construction industry.  The repercussions for misclassifying employees as independent contractors, intentionally or not, include government audits, lawsuits by the government or by the misclassified worker, and payments of back wages, past taxes, civil penalties, and damages. Read More ›