Pinnacle Consultant Group – New ASA Sponsor
The American Subcontractors Association (ASA) is pleased to announce that Pinnacle Consultant Group, a trusted pre-construction estimation company with 12 years of industry experience, has become a Silver Sponsor of the organization. This relationship demonstrates their desire to support the ASA mission to promote the interests of Subcontractors nationwide.
Pinnacle Consultant Group has established itself as a reliable source in subcontracting services, with an extensive portfolio spanning 21 states and a dedicated team of 125 estimators. The company specializes in providing accurate estimates, boosting productivity, and reducing overhead costs for contractors. Clients who have collaborated with Pinnacle report being able to increase their market presence and bidding capacity while lowering overhead, eliminating time and money spent on training estimators, and addressing concerns with churn.
For ASA members, here are some benefits:
- A free estimate for all ASA members to show their ability to go through a set of drawings and present their deliverables.
- ASA members receive 20% off their fees.
- For further information, please contact Faizi Syed at faizi@pinnacle-cg.net or 571.471.2323
Welcome, Pinnacle!
ASA Subcontractor Legal Defense Fund Update
April 2024 – The ASA Subcontractor Legal Defense Fund has been very active recently, as cases roll back into courts across the country following a Covid lull that slowed the pace. Today we are highlighting five of the most recent cases in four different states supported by the Fund on behalf of our subcontractor community.
Pepper Lawson v. Texas Southern University, Texas Supreme Court Case
On May 19, 2023, the Texas Supreme Court ruled unanimously in favor of Pepper-Lawson Horizon International Group and against Texas Southern University. The American Subcontractors Association supported a friend-of-the-court brief on behalf of Pepper-Lawson last year, seeking an appeal on a decision that held that an entity could not be sued for prompt payment violations because it had not waived sovereign immunity.
This ruling has a profound impact on all contractors doing business with the State of Texas. Specifically, state government entities will no longer be able to unreasonably stonewall contractor claimants. The often-used defense practice of challenging the Court’s jurisdiction to stall the case has now been properly clarified and limited. Further, contractors are no longer required to disprove all of the State’s defenses in order to proceed with their case. This case sets an important precedent for courts across the country as it applies to prompt payment for our subcontractors. The state’s appeal to the Texas Supreme Court was denied in December of 2023, closing the case as settled law.
Acuity Homes on appeal to the Illinois Supreme Court
In this case, the Illinois First Court of Appeals has invited the Illinois Supreme Court to resolve the question of whether an upper tier developer/general contractor has CGL coverage for property damage arising out of the work of its subcontractors.
In this case, it was voted that SLDF should join the ABC and NAHB in its amicus brief. In another WIN for SLDF, the Illinois Supreme Court issued an opinion extremely favorable to the construction industry and its broad coalition of support on November 30, 2023. On January 22, 2024, the Illinois Supreme Court denied Acuity’s petition for rehearing so the matter is now concluded.
Twigg v. Admiral Insurance Petition for Review to Oregon Supreme Court Case
The dispute at issue concerns whether an insurance company (Admiral Insurance Company) had a duty to indemnify its insured, Rainier Pacific Development LLC (Contractor), and pay a portion of an arbitration award that homeowners Weston and Carrie Twigg obtained against the Contractor for breach of contract.
After the Owners obtained the arbitration award, they sued the Insurer for breaching its insurance policy with the Contractor when it failed to pay a portion of the Contractor’s liability to the Twiggs under the arbitration award.
Both the trial court and Court of Appeals concluded that the Contractor’s insurance policy did not provide coverage for its liability to the Owners. The courts noted that the insurance policy in question applied to property damage caused by an “occurrence,” defined as an “accident” but that the Contractor’s liability to the Owners arose instead from a breach of a separate settlement agreement, known as the “Repair Contract.”
In this case, it was voted that SLDF should join the ABC-Oregon Columbia Chapter in its amicus brief for the Twigg case. The Oregon Supreme Court granted review on the case, no doubt in part because of ASA’s participation as amicus. A decision from the Court is expected soon.
White Sands Construction v. City of Las Cruces to the Supreme Court of the State of New Mexico
The issue in this case regards calculation of interest on prompt payment claims. New Mexico took its language “1 1/2 percent per month, or fraction thereof” from tax statutes that contain the same language for interest penalties to the government for late payment. Some other states may have, in following New Mexico’s prompt payment and retainage statute, used the same language. The Court of Appeals essentially agreed that the language as drafted reads so that the interest penalty automatically accrues even if the payment is a day or two late and then continues to accrue each following month. They then decided that, despite any legislative history to support it, the interest should actually be calculated at a daily rate, rather than a monthly rate accruing immediately when due.
ASA submitted a quickly turned around amicus in coordination with the ABC & AGC requesting the court accept certiorari in this case. Despite what looked like a good sign from the Supreme Court requesting that the City of Las Cruces respond, the Court denied the petition for writ of certiorari in August of 2023.
Third Coast Services v Castaneda in the Texas Supreme Court
This dispute involved a fatal multi-vehicle accident, which resulted in the death of an individual named Pedro Castaneda. The deceased’s family sued SpawGlass Civil Construction, Inc. and Third Coast Services, LLC for negligence and premises liability. While the direct laws at play apply to the state of Texas, it was agreed that the broader interpretation of immunity for construction workers is relevant nationwide. The issues regarding a broad application of statutory immunity are of interest to construction subcontractors and suppliers involved in Projects who believe the Project is covered by a CGL policy.
The trial court denied the motions and the Court of Appeals of Texas, 14th Appellate Division affirmed prior court rulings, holding that neither the Contractor nor Owner had established that they met each requirement of their affirmative defense. ASA is supporting Spawglass and Third Coast in its petition to the Texas Supreme Court for review.
ASA Supports Repealing the Corporate Transparency Act
ASA, along with 98 organizations, sent a letter to Sen. Tuberville (R-AL) and Davidson (R-OH) in strong support of their legislation to repeal the Corporate Transparency Act (CTA) entitled the Repealing Big Brother Overreach Act. Per their letter, “the CTA was designed to help law enforcement prevent money laundering by requiring shell companies to report information regarding their beneficial owners (BOI) to the Department of Treasury. The law, however, defines a shell company as any legal entity with 20 or fewer employees or $5 million or less in revenues. In other words, every small business in the United States.” The concept of beneficial owner is broadly defined as well, and includes owners, senior management, members of the board, and any employee or outside consultant exerting significant control over the businesses’ operations. Covered entities must report and regularly update the personal information of their “beneficial owners” to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) or face significant fines and jail time.
Last month, the District Court for the Northern Alabama ruled the CTA exceeded the Constitution’s enumerated powers and was therefore unconstitutional, but the resulting injunction applies to the plaintiffs only, members of the National Small Business Association. As a subsequent notice from FinCEN made clear, all other covered entities are still required to file their BOI reports by the end of the year.
Per their letter, “this legislation would put an end to this remarkable overreach by repealing the CTA in its entirety. It would end this unnecessary reporting regime before it gets started and it would give Congress the opportunity to craft a better approach that balances our national security needs with the interests and rights of law-abiding small business owners.”
Changed Overtime Rule for Salaried Employees
The U.S. Department of Labor announced on Tuesday, April 23, 2024, the release of a final rule raising the minimum annual salary threshold for overtime pay eligibility. This primarily applies to executive, administrative, and professional employees, commonly referred to as the “White Collar Overtime Exemptions.”
The Fair Labor Standards Act (“FLSA”) is a federal law that regulates when employees must be paid minimum wage and overtime. Under the FLSA, overtime pay, which is due to all employees who do not fall within a specified exemption, is one and one-half times an employee’s regular pay rate for every hour that is worked beyond 40 hours in a work week. While hourly workers are generally entitled to overtime pay, salaried workers are not if they earn above a certain pay level and supervise other workers, use professional expertise or judgment, or hire and fire workers.
Currently, salaried workers making less than $35,568 annually qualify for overtime pay when they work more than 40 hours in a week. Starting July 1, 2024, the threshold will increase from $35,568 to $43,888 per year. It will then increase again to $58,656 on January 1, 2025.
The change will be most critical for employers which are now claiming an overtime exemption for employees earning more than $35,568 annually, but less than $58,656 annually. Upon enactment, these employees, occupying this $23,088 band, would lose their current status as overtime-exempt.
The new standard will likely be challenged in court by affected industry groups that have argued that excessively raising the standard exceeds the Labor Department’s authority. Unless and until there is court intervention, employers should prepare as follows:
- Review salaried employee classifications to confirm compliance with new salary thresholds to remain exempt.
- Review salaried employee classifications to determine whether employees should be reclassified as nonexempt.
- For employees reclassified as nonexempt, ensure all hours worked are properly recorded.
- For employees reclassified as nonexempt, review budgets, set hours expectations, and development policies for approval of overtime.
Welcome New Advisory Board!
Our heartfelt appreciation goes out to these folks for volunteering their time to make Contractors’ Compass
even better!
William Burke, Risk Strategies Co.
John Cruz, Broadway Bank
Sheri Kitchen, Arnold Refrigeration
Debra Scifo, ASA of Colorado
Cheri Woodsmall, ASA, Greater Kanses City
If you have suggestions for topics, ideas for articles, want to write or participate, please reach out to them,
or contact us at communications@asa-hq.com
