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March 7, 2019
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March 2019 Edition

ASA Working on Draft Proposed Retainage Legislation

As ASA continues to craft its legislative agenda for the 116th Congress, we are focusing our efforts on draft proposed retainage legislation that would lower the maximum retainage rate used by the federal government to 5 percent from 10 percent. In construction contracts, retainage is a sum of money earned by a contractor or subcontractor for satisfactory work, but held until the contract, or a certain portion of the contract, is complete. Retainage generally is held as an assurance for the timely completion and quality of a contractor or subcontractor’s work. It is calculated as a percentage of the total contract price or a progress payment. In most states, retainage is a typical practice in both public and private construction contracts.

On Sept. 19, 2018, the Foundation of ASA, the educational arm of ASA, issued a revised publication by Donald Gregory, Esq., and Eric Travers, Esq., of Kegler, Brown, Hill and Ritter, ASA’s general counsel, designed as a summary of the retainage laws in the 50 states. Retainage Laws in the 50 States is available by logging into your Info Hub account, clicking on Resources in the Index on the left-hand side of the screen, and choosing Contracts & Project Management in the “Show only…” drop-down menu.

The FASA publication became the impetus for this proposed retainage legislation and per Gregory and Travers, “while most subcontractors oppose the practice, some owners and prime contractors believe the practice is necessary. Though retainage arguably serves as a type of ‘insurance’ for owners and prime contractors, it can have the unfortunate effect of requiring contractors and subcontractors to complete work without full payment, in essence ‘financing the job,’ and making it difficult to timely pay their own creditors. In some cases, contractors and subcontractors are burdened with sizable retainage receivables long after the contract has been performed.

This “retainage reality” has prompted ASA, along with the members of the Construction Employers Association, a joint initiative coordinating action on labor, workforce, and construction issues facing our industry, to draft this proposed legislation. Currently, we are crafting a legislative action plan to get this legislation introduced and ultimately passed in this Congress.

Trump Delivers State of the Union Address

On Tuesday, Jan. 5, President Trump delivered the third State of the Union address of his presidency, where he stressed the need for a new era of bipartisanship and compromise. A significant portion of the President’s speech was dedicated to the ongoing budget battle with Democratic leadership over his $5.7 billion federal funding request to construct a wall along the southern border. Lawmakers are negotiating to avoid another partial government shutdown as the Feb. 15 deadline approaches. President Trump has shown no signs of backing down on his border wall request, stating in his address that “I’ll get it built.” Democratic leadership continues to stand firm in opposition to border wall funding. Other priorities outlined by President Trump included:

Infrastructure Funding: The President stated that “infrastructure legislation is not just an option, it’s a necessity.” Though the President didn’t provide any details on how to pay for a public works package, he stated, “I know Congress is eager to pass an infrastructure bill—and I am eager to work with you on legislation to deliver new and important infrastructure investments, including investments in cutting edge industries of the future.”
Lowering the Cost of HealthCare and Prescription Drugs: President Trump offered lowering the cost of prescription drugs as a “major priority” in 2019. Specifically, President Trump stated that he wanted to work with Congress on “lowering the cost of healthcare and prescription drugs—and to protect patients with pre-existing conditions.”
Trade Deals: The President urged Congress to approve the United States-Mexico-Canada Agreement (USMCA) which was reached on Sept. 30, 2018, and signed by President Trump and his Mexican and Canadian counterparts at the Group of 20 summit on Nov. 30, 2018. President Trump also set a March 1, 2019, deadline for the United States and China to reach a satisfactory solution on trade before the administration increases tariffs on Chinese goods.

As President Trump adjusts to working with a divided federal government, the fate of many of the priorities outlined in his address will be determined by his ability to work across the aisle in Congress.

OSHA Releases Guidance on Silica Rule

The Occupational Safety and Health Administration issued a Frequently Asked Questions that applies to all occupational exposures to crystalline silica. The FAQ raises and answers 64 questions, which were developed in consultation with representatives from construction industry to provide guidance on the standard’s requirements such as exposure assessments, regulated areas, methods of compliance, and communicating silica hazards to employees. This document comes after OSHA began enforcing the silica rule on June 23, 2018. The OSHA mandate lowered the allowable silica exposure level by 50 percent. To meet this requirement, OSHA expects work sites where airborne silica is common to reduce exposure levels by making changes such as improving ventilation, installing filters on vacuum cleaners and air circulators, separating work areas, and as a last resort, providing respirators. Inhaling high levels of silica dust can lead to silicosis, a life-threatening lung disease. OSHA estimates that 2.3 million workers are exposed to silica dust each year. While the FAQ does provide clarity, it remains unclear how OSHA defines “feasible” as a requirement for what building and production changes must be made to comply with the new exposure limit. Other topics addressed in the FAQs include acceptable methods for cleaning silica dust off floors and other surfaces, and allowing employers to use objective data, such as air monitoring data from industrywide workplace surveys, to assess whether their workers are exposed to silica at levels triggering the requirement to take protective actions.

OSHA Proposes Final Rule on Beryllium Exposure

On Jan. 9, 2017, OSHA issued a final rule adopting a comprehensive general industry standard for occupational exposure to beryllium and beryllium compounds. In the proposed final rule, OSHA sought to modify the general industry standard to clarify certain provisions, simplify and improve compliance, and enhance worker protections. Specifically, the rule established a new permissible exposure limit of 0.2 micrograms of beryllium per cubic meter, measured as an eight-hour-time-weighted average concentration. The rule also established an action level, which is the level of concentration of harmful or toxic substances that when exceeded, remedial action is required, and a short-term exposure limit. Under this rule, employers were also required to use engineering and work practice controls to reduce airborne concentrations of beryllium to levels below the PEL and STEL.

Following OSHA’s publication of the 2017 beryllium rule, industry stakeholders raised concerns with several definitions within the rule, citing them as broad in nature. Concerns were also raised regarding the possibility of varying interpretations of these definitions, which may have led to unintended enforcement issues. In response to these criticisms, OSHA signed a settlement agreement in federal court on April 24, 2018, requiring the agency to issue clarifications to the rule. On Dec. 11, 2018, OSHA released a new proposed rule on beryllium to amend certain parts of the beryllium standard for general industry “to clarify or simplify certain provisions of the general standard.” While the rulemaking is pending, compliance with the proposed rule will be accepted as compliance with the standard.

The proposed final rule modifies several of the general industry standard’s definitions, along with the provisions for methods of compliance, personal protective clothing and equipment, hygiene areas and practices, housekeeping, medical surveillance, communications of hazards, and record keeping. Per OSHA, “the proposed changes would maintain safety and health protections for workers and enhance worker protections overall by ensuring that the rule is well-understood, and compliance is more straightforward.”

OSHA Rescinds Change in Job Injury Reporting Requirements

On Jan. 25, OSHA rescinded an Obama-era requirement for establishments with 250 or more employees to electronically submit every year information from OSHA Form 300, an annual report of injury and illness cases, and Form 301, which requires a detailed report on each case. Employers are still required to electronically submit Form 300A, which summarizes the information from the other two forms, including the percentage of workers injured and the number of cases. While the rule, which took effect on Feb. 25, doesn’t require Forms 300 and 301 to be electronically submitted, these two forms, along with Form 300A must still be completed and available if requested by the agency.

The OSHA rule change has been met with mixed review. Those who support the change, including the U.S. Chamber of Commerce, argue that injury and illness cases are sensitive information, which should not be made public. Rep. Bobby Scott (D-VA), chairman of the House Education and Labor Committee, is opposed to the rule change because he believes it “shields employers from accountability for the health and safety of their employees.” Legal experts expect to be challenged in federal court. We will continue to track developments on the rescinded rule as it is phased in next month or in the event it meets a legal challenge.