November 2017

Appeals Court Hears Oral Arguments on OSHA Silica Rule

On Sept. 26, business and labor lawyers, as well as representatives of OSHA, made oral arguments concerning OSHA’s silica rule before the U.S. Court of Appeals for the District of Columbia Circuit. Industry attorneys, including those representing ASA and the Construction Industry Safety Coalition, argued that the OSHA rule is not technologically or economically feasible for construction employers. They also contended that OSHA’s use of various control measures as alternative means of compliance shows that OSHA is acknowledging that its new permissible exposure level is not attainable. However, lawyers for organized labor argued that the rule does not go far enough to protect already-exposed workers. In addition, attorneys representing OSHA told the court that OSHA’s risk assessment findings are supported by numerous public health organizations, including the National Institute of Occupational Safety and Health and the American Public Health Association. They questioned industry assertions that the rule is not technologically feasible, arguing that respirators may be used if companies can not reduce exposures below the new PEL. The three-judge panel hearing the case vigorously questioned the advocates for all the parties. Judge Karen Henderson noted that silicosis is the most common occupational illness in the world. Judge Merrick Garland posited that OSHA has discretion to protect workers in the face of scientific uncertainty over the level of exposure that health effects will occur. Garland said, “The law is clear when scientists on both sides” draw different conclusions, “it’s perfectly appropriate for OSHA to weight in favor of occupational safety.” OSHA began enforcing its rule on Sept. 23; under a temporary enforcement policy, OSHA will take into account the good faith efforts of employers to comply with the rule for 30 days. The oral arguments in the case can be heard at www.cadc.uscourts.gov/recordings/recordings.nsf. ASA’s legal fees in this case were paid for by its Subcontractors Legal Defense Fund. Contributions to the SLDF may be made online.

ASA Calls on OSHA to Delay Crane Operator Certification Requirements

In comments submitted on Sept. 29, ASA called on the Occupational Safety and Health Administration “to proceed promptly to finalize the proposed rule” that would extend the deadline for operator certification of cranes and derricks in the construction industry by one year to Nov. 10, 2018, and extend the existing employer duties for the same period. In August 2010, OSHA issued a final standard establishing requirements for cranes and derricks used in construction work. In September 2014, OSHA extended the deadline by three years to Nov. 17, 2017. That rule also extended by three years the employer’s responsibility to ensure that crane operators are competent to operate a crane safely. OSHA is now proposing an extension of the enforcement date to address construction industry concerns over the operator certification requirements.

ASA Calls on OSHA to Halt Beryllium Rule for Construction

In an Aug. 28 letter to the Occupational Safety and Health Administration, ASA told the agency that neither its final rule for general industry nor its proposed rule for construction and shipyards on occupational exposure to beryllium are necessary to protect workers in the construction industry. ASA said that its review of academic and industry safety literature found “no evidence that exposure to beryllium in the construction industry causes a significant risk to workers.” ASA also joined with the Construction Industry Safety Coalition in more detailed comments to OSHA, addressing procedural issues with the rule, the cost effectiveness of the proposed rule, and regulatory alternatives proposed by OSHA. The CISC told OSHA it “believes strongly that a comprehensive standard regulating beryllium exposure in construction is unnecessary from a safety and health standpoint and would impose significant burdens on construction contractors.” CISC posited that while the rule for construction that OSHA proposed on June 27 is preferable to the final rule for general industry on Jan. 9, “substantial evidence does not support lowering the permissible exposure limit for beryllium in construction at all. Furthermore, substantial evidence does not support adoption of a Short Term Exposure Limit broadly in the construction industry.” CISC wrote that both the final and proposed beryllium rules represent “regulatory overreach, requiring contractors to expend resources to address health outcomes that do not exist in construction.” Both the ASA and CISC letters requested that OSHA adopt the approach set forth in the agency’s 2015 proposed rule and maintain the previous PEL for beryllium compounds in construction.

Make Your Hotel Room Reservations for SUBExcel 2018

Make your hotel reservations at Tempe Mission Palms in Tempe, Ariz., and register online for SUBExcel 2018, the premier education and networking event for construction subcontractors and suppliers. ASA’s annual national convention will take place Feb. 28-March 3, 2018. ASA has negotiated the special room rate of $204 single/double. The early-bird registration deadline and cutoff date for the hotel room block is Jan. 31, 2018. For more information, visit ASA’s SUBExcel 2018 Web site or enter via the SUBExcel 2018 Web portal, www.SUBExcel.com.

ASA Asks House-Senate Conferees to Approve Freeze of Miller Act Threshold

ASA called for approval of a freeze of the statutorily-required periodic inflation adjustments to the threshold for the federal Miller Act in an Oct. 16 letter to members of a Congressional conference committee appointed to resolve differences between the House- and Senate-passed versions of the National Defense Authorization Act for 2018 (H.R. 2810). ASA Chief Advocacy Officer E. Colette Nelson told the conference committee, “This provision is necessary to help protect the payment of construction subcontractors and suppliers on federal construction.” The provision, which was included only in the House-passed bill, would freeze the threshold at $150,000, rather than allowing it to increase by $50,000 every five years. The 1935 Miller Act requires a prime contractor on federal construction projects to provide a performance bond for the protection of the government and a payment bond for the protection of subcontractors and suppliers. Congress is expected to approve the NDAA before the end of the year.

ASA Supports Extension and Changes to OSHA Reporting Rule

ASA called on the Occupational Safety and Health Administration to postpone its previously-established enforcement deadline for its employer reporting rule. In a July 12 letter, ASA said the enforcement delay would give employers additional time to comply with the rule, which require many employers, including those in the construction industry, to submit the information on their OSHA Forms 300A to OSHA electronically beginning on July 1, 2017. On June 28, OSHA proposed to delay the initial submission deadline to Dec. 1, 2017. In its letter, ASA also urged OSHA to reconsider the rule’s reporting requirements. OSHA has indicated it intends to reconsider and will likely revise the rule before the new Dec. 1 effective date.

ASA Introduces White Paper on ‘Subcontractor Bidding and the Law’

ASA’s newest white paper explores the ways subcontractors can get in trouble when bidding, from failing to comprehend the scope of work upon which they are bidding to making careless errors. Subcontractor Bidding and the Law discusses the bidding process, contract award, bid errors and the legal concept of promissory estoppel. The white paper sets forth seven guidelines:

1. Beware of bids that refer to the prime contractor’s standard subcontract which is not furnished with the bidding documents.
2. Avoid acceptance based upon the prime contractor’s standard subcontract.
3. Consider developing and using your own bid proposal that includes those subcontract terms that are the most important to you. ASA includes a model “Subcontractor Bid Proposal” as part of its Subcontract Documents Suite, which is available to ASA members on the ASA Web site.
4. Watch out for acceptances that vary or add to the bid documents upon which your bid is predicated.
5. When bidding via email or telephone, establish that the bid is an estimate only and not a firm price. Advise the prime contractor of any variation to the bid documents.
6. Verify a telephone bid with an email to the appropriate representative of the prime contractor, stating the date, time, place, the nature of conversation, variation to bid documents, and the conditional aspect, if any.
7. Upon discovery of a mistake, take the following actions immediately:

• Notify the prime contractor of the error in writing.
• Take no action that could be construed as an acceptance of the subcontract.
• Offer to meet with the prime contractor’s representative and bring your work sheets to explain the basis of the error.
• Demand the return of your bid deposit.
• Offer not to rebid the project if excused from your bid to avoid charges of collusion.

The new white paper is available under “Bidding and Market Development” in the members-only section of the ASA Web site.

ASA Publishes White Paper on Progress Payments

Receiving timely payment for work properly performed is vital to any subcontractor. Avoiding or preventing late payments is essential. Education is the key. An educated subcontractor negotiates better contracts. ASA’s new White Paper on Progress Payments advises subcontractors to keep in mind that:

• You are not only a subcontractor but also a creditor. You are a creditor because your work is performed on the promise of a future payment by a customer.
• You, as a responsible creditor, must hold up your end of the bargain according to the payment rules to which you agreed in the contract document.
• You must have and use collections tools.

The white paper also provides tips that a prudent subcontractor can use to protect itself from the potentially devastating effects of late progress payments, including starting with the bidding process, establishing unambiguous terms, submitting proper invoices, and implementing an effective collections program. The white paper is free for ASA members and is located in the “Contracts & Project Management” section of the Member Resources area of the ASA Web site.

ASA’s Manual Charts State Anti-Indemnity Laws

How does your state handle indemnity? You can easily find out with ASA’s Anti-Indemnity Statutes in the 50 States: 2016. This chart is a resource for identifying which states have anti-indemnity laws and indicates which states prohibit indemnity for partial fault or sole fault of the indemnified party. Furthermore, the chart indicates in which states a party is prohibited from requiring a subcontractor to name it as an additional insured, thereby closing the additional insured loophole.

Anti-Indemnity legislation is important to subcontractors because too often contractors and owners shift their own liability and risk to the subcontractors. Specifically, “hold harmless” and “additional insured” provisions in a construction subcontract seek to hold the subcontractor accountable for worksite accidents or other losses that are not the fault of the subcontractor. These “hold harmless” and “additional insured” provisions are problematic to subcontractors because they may unfairly shift the financial responsibility for claims to the subcontractor or its insurance company. As a result, a party who is indemnified by the subcontractor may use less care to avoid injury or loss because the indemnified party is not liable for its own actions. This carelessness may result in more accidents on the worksite that could have been avoided. Many states have enacted laws that address at least some of the issues in shifting the burden of liability to a subcontractor. Forty-three states have some form of law which prohibits a construction contract that requires a subcontractor to indemnify another party for its negligence (but some of these states limit the application of the law, for example, only to public projects). Only 28 states prohibit a subcontractor from indemnifying another party for its sole or partial fault, meaning 15 of the states with some form of anti-indemnity legislation only prohibit a subcontractor from indemnifying another party for its sole fault. Even fewer states have addressed the additional insured dilemma so far. Only six states prohibit a party from requiring another party to name it as an additional insured under a policy of insurance, but the trend is moving in this direction.

ASA-member law firm and ASA general counsel, Kegler, Brown, Hill and Ritter, Columbus, Ohio, prepared the manual, which contains contributions from construction attorneys from across the country. The ASA Anti-Indemnity Statutes in the 50 States: 2016 is a members-only resource located on the ASA Web site in the “Insurance and Risk Management Documents” section under “LogIn/Access Member Resources.”

FASA Manual Helps Subcontractors Navigate Retainage Laws in the 50 States

A reference manual published by the Foundation of ASA, Retainage Laws in the 50 States, is helping construction subcontractors understand retainage laws where the projects they bid and work on are located. As it applies to subcontractors, retainage is the practice of regularly holding a portion of progress payments that subcontractors earn for performing construction services. “In many states, the retained funds are to be held in escrow, to be paid back to the contractor or subcontractor with interest,” the guide explains. “Many states also permit contractors and/or subcontractors to substitute securities in lieu of retainage. The majority of states permit contracting agencies or owners to reduce or even eliminate the rate of retainage once a certain portion of the contract is complete.” Each state entry in the manual reviews critical factors in retainage law for private and public work, including the retainage rate permitted under law, retainage release milestones, and any options to provide alternative securities in lieu of retainage. Retainage generally is held as an assurance for the timely completion and quality of a contractor’s or subcontractor’s work. It is calculated as a percentage of the total contract price. However, the practice places a severe financial hardship on contractors and subcontractors. When contractors and subcontractors are forced to complete work without full payment, they, in essence, finance the job, making it difficult to timely pay their own creditors. In some cases, contractors and subcontractors are burdened with sizable retainage receivables long after project completion. The ASA-member law firm and ASA general counsel, Kegler, Brown, Hill and Ritter, Columbus, Ohio, prepared the manual. The manual is available to ASA members as a downloadable PDF document in the Member Resources section of the ASA Web site under “Contracts & Project Management.”

Report Sheds Light on Veteran-Owned Businesses and Their Owners

The U.S. Small Business Administration has released a report on veteran-owned businesses. The report gives a detailed profile of this robust business population based on the latest available data, the U.S. Census Bureau’s 2012 Survey of Small Business Owners.

• In 2012, the United States had 21.2 million veterans, and 2.52 million businesses were majority-owned by veterans.
• Almost all of veteran-owned businesses (99.9 percent) were small businesses.
• Veteran-owned firms had receipts of $1.14 trillion, employed 5.03 million people, and had annual payroll of $195 billion.
• These firms represented 9.1 percent of all U.S. firms.
• 13.2 percent of these firms were in the construction industry.
• The three states with the most veteran-owned businesses were California, Texas, and Florida.
• The three states with the highest percent of veteran-owned businesses in their populations were South Carolina, New Hampshire, and Virginia.

The report, titled Veteran-Owned Businesses and Their Owners: Data from the U.S. Census Bureau’s Survey of Business Owners, is one of the only large-scale compilations of data on veteran-owned businesses in the United States, and it provides valuable data for analytical and policymaking.