Construction Law Signal

Construction Law Signal

Insights & Information on Current & Emerging Developments affecting the Construction Industry

Attention Philadelphia Employers: New and Important Changes to the "Ban The Box" Law

Posted in Labor and Employment, Pennsylvania

Philadelphia’s 2011 “Ban the Box” lawemployment-applications.jpg, which restricts an employer’s ability to inquire into a job applicant’s criminal history at the initial stages of the application process, is “old news” – but the recent changes that went into effect on March 14, 2016 are anything but. Our firm will be getting into the details of this recent development at its 8th Annual Labor and Employment Seminar (April 27, May 4, and May 12).

In short, every Philadelphia employer needs to make the necessary changes to its job application procedures to comply with the broader requirements of the law that former Mayor Michael Nutter signed into law before leaving office in December 2015.

The 2011 Version

As enacted in 2011, Philadelphia employers with 10 or more employees could not include the “box” on a job application asking about criminal records. Employers were not permitted to ask about criminal records at an initial interview, but could do so after the first interview. And, when asking about a criminal background, employers were prohibited from asking about arrests or anything other than criminal convictions. Violations of the law carried up to a $2,000 penalty.

The 2016 Version

Under the new changes, the law applies to essentially every employer with one or more employees (although there are still exceptions for industries and businesses where the need to make such inquires is necessary to qualify for the job). In a broad expansion of the law’s prohibitions, employers cannot make inquiries about a job applicant’s criminal history until after a conditional offer of employment. There are particular requirements in the law which are intended to control and limit how the employer may consider an applicant’s criminal history. However, the law does not explain clearly how an employer can evaluate an applicant’s criminal history without running afoul of the law.

Under the 2011 version, an agency of the City of Philadelphia could investigate alleged violations of the law and issue penalties. The new law expands employer exposure. It permits aggrieved job applicants to file a civil lawsuit for compensatory damages and attorneys’ fees.

As a consequence, every Philadelphia employer needs to take close look at its hiring procedures and fine tune the process to comply with the law. And, when an a job offer is made to an applicant and a criminal history surfaces, you should consult with your attorneys to navigate the law and determine how to proceed in a lawful manner that is practical for your company.

Again, we encourage you to attend our upcoming Labor and Employment Seminar to learn the details about this recent development – and many other topical developments since last year.

Jonathan Landesman is a Partner in the Firm’s Labor & Employment Group. He practices in all areas of labor and employment law.

Mark J. Leavy is an Associate in the Firm’s Labor & Employment Group. He focuses his practice in employment litigation at the trial and appellate levels.

Maryland Approves P3 Contract for Purple Line Light Rail Project

Posted in Maryland, Transportation

Rails to TrailsThe Maryland Department of Transportation/Maryland Transit Administration (MDOT/MTA) recently announced its selection of Purple Line Transit Partners as the concessionaire for the new 16.2 mile, 21-station, light rail Purple Line that will run through Montgomery and Prince George’s counties. On April 6, 2016, the Maryland Board of Public Works, comprised of Governor Larry Hogan, Treasurer Nancy Kopp, and Comptroller Peter Franchot, unanimously approved the public private partnership agreement with Purple Line Transit Partners.

We have been following the development of this project for several years. In 2013, Maryland identified it as the first P3 project under new legislation that updated its Public Private Partnership law to facilitate the use of P3s.

There were questions about the viability of the project in 2014 during the gubernatorial election cycle. But after taking office in January 2015, Governor Larry Hogan gave conditional approval to a reduced-cost version of the Purple Line project and outlined three criteria for approval of the project: (1) additional financial support from Montgomery and Prince George’s counties; (2) reserved federal funding; and (3) aggressive pricing from the successful team. Montgomery and Prince George’s counties pledged $330 million in cash and non-cash contributions to the project. The federal government reserved approximately $900 million for the project, with $125 million recommended for FY 2017. Finally, the initial state expenditure for construction cost was reduced by $8 million to $159.8 million, and the amount of the average annual availability payments was reduced by $18 million to $149 million per year over thirty (30) years. As a result, the project is reportedly coming in $550 million below prior estimates, and the Governor approved moving forward with the project.

Purple Line Transit Partners will be responsible for designing, constructing, operating, and maintaining the project and will also help finance a portion of construction. Maryland Transportation Secretary Pete Rahn said Purple Line Transit Partners provided the best technical proposal and had the lowest overall price. Purple Line Transit Partners is comprised of three equity members: Fluor Enterprises, Inc., Meridiam Infrastructure Purple Line, LLC, and Star America Purple Line, LLC. Fluor will lead the design-build team, which includes The Lane Construction Corporation and Traylor Bros., Inc. Fluor has experience with these types of projects, as it is currently involved in Denver’s Eagle P3 light rail project.

It is anticipated that the contract will now proceed to financial close in June 2016. After the financial closing, construction is anticipated to begin in late 2016 and will take approximately 6 years. The project is scheduled to open for service in Spring 2022. Purple Line Transit Partners will then operate and maintain the project for the next thirty (30) years.

Jason C. Tomasulo is Senior Counsel in the Construction Group of Cohen Seglias. He focuses his practice on construction law and government contracts and represents owners, general contractors, subcontractors, suppliers and sureties.

Real Estate 101: Knowing Your Property Value and Challenging Your Tax Assessment

Posted in Business, Pennsylvania, Real Estate, Tax

After months, maybe years, of planning, raising capital, obtaining permits and waiting out construction, your gleaming new building is open and occupied. Soon, you’ll get a simple, one-page letter from your county’s Tax Assessment Office. What should you do if that letter indicates that your property is worth about a half-million dollars more than your appraisal reflects? Every Pennsylvania property owner is entitled to an annual appeal of their property assessment through the real estate tax assessment appeal process. Knowing the value of your property, your tax liability and whether you can reduce your tax burden through an appeal is as critical as managing any other area of your financial portfolio.

Calculating your Property Tax and Fair Market Value (FMV)

In Pennsylvania, real property typically incurs school, city/township and county taxes. Each of the three taxes is assigned a millage rate, which is used to calculate the property’s tax liability. To calculate the total real estate tax owed, the total millage of all of the taxing authorities is multiplied by the property’s assessed value. It is important to note that tax assessment appeals only challenge the assessed value of your property, NOT the imposed millage rate. Millage rates are published on each county’s website.

In addition tReal Estate Taxo understanding your property tax liability, you should also know your property’s FMV. This is the most important component for determining whether to appeal a tax assessment, as it requires you to compare the value of your property to other properties that are similarly sized and used. To calculate your FMV, multiply your assessed value by the Common Level Ratio (CLR). The CLR is determined annually by the PA State Tax Equalization Board and is an average ratio of assessments and sale prices in that county.

We recommend that you engage a licensed real estate appraiser to appraise your property. The appraisal will typically set forth an array of comparably sold properties, contemporaneous photos and measurements, all of which you should use to determine whether your property was over-assessed. The appraiser will also determine a median property value, considering both real and potential income of the property and the cost to build a similar building. If you decide to appeal your assessment, you should request that the appraiser attend your hearing to answer any appraisal-related questions.

The Board of Assessment Appeals

A county-based Board of Assessment Appeals hears appeals.  Each county’s Board has its own rules, regulations and procedures, and you should familiarize yourself with the rules prior to your hearing.  The rules as well as the assessment appeal forms are typically available on the county’s website. The decision of the Board is generally rendered at the conclusion of the hearing or, in more complicated cases, within a matter of weeks. If you are dissatisfied with the outcome of your hearing, you may appeal the Board’s decision to the county Court of Common Pleas. For this appeal, parties are strongly advised to engage an attorney familiar with the required procedures.

While it may seem complicated, the real estate tax assessment appeals process is relatively simple and a great way to take control of your tax liability going forward. A successful appeal can save you money for years to come.

Michael L. Solomon is Senior Counsel in the Cohen Seglias Harrisburg office, and is a sitting appointee of the Dauphin County Board of Assessment Appeals. Michael concentrates his practice in the areas of real estate, administrative law, creditors’ rights, commercial transactions and corporate finance.

Can a Contractor Sue a Design Professional Without a Contract? Not in Maryland

Posted in Contract, Design and Technology, Maryland

In some states, courts allow contractors to sue design professionals for negligence even in the absence of a contract. In others, like Maryland, courts apply a rule known as the Economic Loss Rule (ELR) to bar such claims. Courts apply the ELR when, without a contract in place, someone sues another for purely financial losses (i.e., not for personal injuries or property damage). The ELR is very important in the construction world because contractors who sustain losses that they attribute to substandard design documents often sue the design professional who prepared the plans and specifications, even though they rarely have a contract with the designer.

Maryland.jpg

In a recent case – Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP – the Maryland Court of Special Appeals (“Court”) reaffirmed the ELR and rejected various claims brought by a contractor against a design professional. The Balfour Beatty Infrastructure case involved a public works project for the City of Baltimore (“City”). The City entered into contracts with the design and engineering firm Rummel Klepper & Kahl, LLP (“RK & K”) to upgrade a water treatment plant. The City also entered into a contract with Balfour Beatty Infrastructure, Inc. (“Balfour”) to build the upgrades. Balfour did not have a contract with RK & K. Due to a series of design errors, Balfour suffered delays during construction and performed additional work that it attributed to the design errors. Based on these facts, Balfour sued RK & K for professional negligence and negligent misrepresentation, alleging that RK & K supplied false information to prospective bidders and failed to establish a  reasonable contract duration.

Anticipating that the Court might apply the ELR since Balfour did not have a contract with RK & K, Balfour argued that there was a contract-like relationship between RK & K and Balfour because RK & K knew that Balfour would rely on its designs and project schedules. Balfour argued that this reliance was sufficient to create a contract-like relationship (known to Maryland courts as an “intimate nexus”). The Court rejected Balfour’s argument, holding that the “intimate nexus” test, used to establish privity of contract under certain circumstances, does not apply to public construction contracts where only purely economic damages are sought for negligence claims like the ones Balfour asserted against RK & K. In other words, the ELR applied to bar Balfour’s claim against the designer.

What does this decision mean to members of the Maryland construction industry? It means that, without a contract, contractors cannot sue an engineer or architect directly for purely economic damages sustained on a public construction contract. Public construction contracts are design-bid-build contracts involving multiple steps. In most cases, the owner first enters into a contract with the architect and/or engineer to design the project. The owner subsequently releases a request for proposals for general contractors to bid on the project based upon the drawings and specifications prepared by the design professional. Because there is not usually a contractual relationship between the contractor and designer, and the Balfour Beatty Infrastructure case says there is not a sufficient nexus between the design professional and the contractor, the contractor’s recourse for any damages attributable to any design defects in Maryland is often limited to the owner.

Courts treat this issue differently from state to state, so it is important for owners, design professionals, and contractors to consult with their attorneys and understand how construction law principles like the ELR operate in the states where they conduct business.

Steven M. Williams is the Managing Partner of the Harrisburg, Pennsylvania office of Cohen Seglias, Chair of the firm’s Commercial Litigation Group and a member of the Business Practices and Labor & Employment Groups. Steve has been representing landlords in virtually every aspect of their business for over 23 years and concentrates his practice in the areas of commercial and civil litigation, real estate, landlord and tenant law, employment law, business and corporate law and construction law.  

Scott A. Earle is a Senior Associate in the Firm’s construction, commercial and creditors’ rights practice groups. Scott practices all aspects of civil and commercial litigation, concentrating on construction, asbestos defense and bankruptcy litigation before state and federal courts, as well as arbitration forums in the jurisdictions of Delaware, New Jersey and Pennsylvania where he is admitted.

Attention Philadelphia Contractors: Do You Comply with OSHA Training and Supervision Requirements?

Posted in Compliance, Construction

The City of Philadelphia has issued new code requirements for construction worker safety training. The new rules went into effect on October 1, 2015, and the Department of Licenses and Inspections has announced that strict enforcement will begin on April 1, 2016.

Under the new regulations, all contractors and employees (including subcontractors) performing construction or demolition work in the City of Philadelphia for which permits have been issued are now required to complete OSHA 10 safety training, or an approved equivalent. This requirement applies to all trades, as well as state-registered home improvement contractors. Workers are required to carry written proof establishing that they have completed an OSHA 10 training course while on the job site, and their employers must also maintain on-site proof of completion for each worker. This information must be furnished to the Department of Licenses and Inspections upon request. The OSHA 10 training is only required to be completed once and does not expire.

Additionally, all contractors licensed under Section 9-1004 of the Philadelphia Code must employ at least one supervisory employee who has completed OSHA 30 safety training, or an approved equivalent, within the past 5 years. Construction or demolition of major buildings requires continuous oversight by a site safety manager who has completed an OSHA 30 course. The designated site safety manager must carry an identification card or certificate of completion issued by the provider of the OSHA 30 training course.

The identification of an employee with OSHA 30 training and written proof of completion were required for new contractor license applications made on or after October 1, 2015, and must be submitted with applications for the renewal of contractor licenses set to expire on or after March 31, 2016. Licensed plumbing, electrical, fire suppression, and warm-air contractors are exempt from this requirement.

Effective April 1, 2016, failure to comply with these new regulations will result in the issuance of a violation notice and will subject the contractor to a fine. Repeated or egregious violations may result in the suspension or revocation of the contractor’s license.

Lisa Wampler Named Managing Partner of Cohen Seglias' Pittsburgh Office

Posted in Firm News, Lisa Wampler

Cohen Seglias has announced the promotion of Lisa M. Wampler to Managing Partner of the Firm’s Pittsburgh office. The announcement marks the first female managing partner in the Firm’s history.

“Lisa has been instrumental in the growth of our construction practice in Pittsburgh. She has proven leadership skills and continues to be a great ambassador for the Firm in Western PA,” said Jason Copley, Cohen Seglias’ Firmwide Managing Partner.

Lisa joined Cohen Seglias in 2003 with the opening of the Pittsburgh office. Since that time, she has developed an active and diverse construction litigation practice. She represents owners, general contractors, construction managers, and the different trades in complex matters involving all phases of the construction process, including negotiating and drafting contracts, and advising clients as to preparing claims for extra work, inefficiencies, delays, and changed conditions while construction is ongoing for both private and public sector projects.

In addition, Lisa serves as the Chair of the Firm’s Women’s Initiative. She is active in a number of professional organizations, including the American Subcontractors Association, Master Builders Association, Associated Builders and Contractors, National Electrical Contractors Association, Commercial Real Estate Women, and sits on the council of the Allegheny County Bar Association’s Women in the Law Division and Construction Law Section.

Cohen Seglias numbers 60 attorneys in nine locations, including five attorneys in the Pittsburgh office, which is centrally located at 525 William Penn Place. Lisa can be reached at lwampler@cohenseglias.com or 412.434.5530

Up in the Air: Drones and the Future of the Construction Job Site

Posted in Construction

Unmanned aerial vehicles, commonly referred to as “drones,” are appearing more frequently in the skies over construction project sites.

Drones  typically operate from a handheld device, such as an iPhone, and can be connected to a Wi-Fi network. The physical design utilizes four to eight rotary blades, which allow for fluid vertical movement and aerial stability. Such stability—the ability to hover in place for an extended period of time—can prove particularly beneficial for surveying a job site. Drones can be used to capture images of the work from above and then transmit the information to one of a number of mapping software programs, which are, in turn, used to analyze and monitor all phases of a project, from site preparation to completion.

Drones also are proving to be a valuable marketing tool, by allowing for aerial footage or video of job sites, which can be shown to clients and potential clients. In the near future, drones may be used for physical transportation of equipment and project materials. Indeed, multinationals, including Amazon and Google, have famously begun discussing the use of drones to transport and deliver goods to their customers.

Drone technology possesses the potential to fundamentally change the construction industry.

Governmental oversight and restrictions

Laws and safety regulations are starting to address this new use of drone technology. The Federal Aviation Administration (“FAA”) is the governmental agency tasked with the regulation of civil aviation. Presently, the FAA allows for recreational, not commercial, use of drones weighing under .55 lbs., as long as the drones are not flown more than 400 feet above ground and not operated without permission near an airport or other location that may interfere with air traffic.

Although commercial use of drones is not technically illegal, the FAA requires commercial drone operators to apply for and obtain a Section 333 exemption. The process to obtain this exemption is cumbersome and slow, but contractors should be aware that the FAA has demonstrated it will not hesitate to levy significant (seven figure) civil penalties to contractors who are discovered using drones on project sites without the necessary Section 333 exemption.

The FAA continues to develop and finalize its drone regulations, and from a legal standpoint, the use of drones by construction contractors is still in an uncertain state of limbo. Beyond remaining mindful of the FAA requirements and regulations as they are updated, construction contractors would be well-served to implement their own internal guidelines with respect to the use of drones on the job site. For instance, drone operators should be required to go through a training protocol, and drone flight paths should be planned in advance and properly documented.

Stay tuned…

In 2016 for news regarding how the FAA and the courts respond to the continued advancement of drone technology. If you are contemplating using drones on your job site, you should consult with an attorney to consider the legal issues associated with this new and developing technology.

Beware: New Rigorous Safety Sweeps of NYC Construction Sites to Begin

Posted in Compliance, Construction, New Jersey, New York

On February 12, 2016, New York City Mayor Bill de Blasio and New York City Department of Buildings Commissioner Rick Chandler announced a new aggressive campaign to improve worker safety on construction sites. Specifically, commencing next Tuesday, February 16, rigorous safety sweeps of constructions sites ten stories or less are expected to be performed.

Doubtlessly, this initiative is a direct result of 1) an increase in construction related deaths in 2015, and 2) the investigation into the death of a worker on a project at Ninth Avenue that resulted in, among other things, the August 5, 2015 indictment of Harco Construction and its site safety manager for manslaughter and the debarment of Harco for safety violations.

In 2015, there were 11 deaths on New York City construction sites during which time there has been a 300% increase in construction in the City. However, in an unexpected development, 70% of all accidents occur at building sites of less than 10 stories.

Effective immediately, all new building sites of less than 10 stories or that involve an alteration to the building’s floor plates will now require a construction superintendent. This is a substantial change. Previously, many of these projects were exempt from the requirement of having a site safety manager to enforce the site safety plan.

All construction sites in the City, an estimated 1,500, will be inspected over the next 90 days, with a special emphasis on jobs 10 stories and below.

Penalties for violating stop work orders and other serious violations will be quadrupled from a range of $2,400 – $10,000 to $5,000 – $25,000.

Stop work orders will be issued more aggressively for safety violations. According to the Mayor’s statement, the emphasis will be on worker safety, but expect a similar emphasis on pedestrian safety as well due to last week’s crane accident.

Over the next 4 months, the Department of Buildings will hire 100 new inspectors. These new inspectors herald another change, referring more safety type issues for criminal prosecution.

In addition, the City announced that it will suspend contractors (i.e., bar them from pulling or maintaining any permits for construction) for poor safety records. Harco’s suspension was the first and it was lifted after they entered into a settlement with the City. The terms are not public, but the record suggests that the Harco settlement did include payment of a heavy fine.

The City believes that most construction accidents are preventable and hopes that by increasing the fines, suspensions and stop work orders will bring about more voluntary compliance with safety rules.

We will continue to monitor the City’s roll-out of this new, aggressive program.

Carol A. Sigmond  is a Partner in the New York Office of Cohen Seglias. She concentrates her practice on construction industry matters, including contract preparation, mediation, litigation, suretyship, bid protests, appeals and arbitration.

George E. Pallas is the Treasurer of Cohen Seglias as well as a Shareholder and member of the Board of Directors. He is also a Partner with the Firm’s Construction Group and acts as counsel to a wide range of construction clients that include general contractors, subcontractors, and suppliers on both public and private projects. 

Ignorance is not Bliss: Construction Contract Provisions You Need to Know

Posted in Contract, D.C., Events, Liens

On February 11, join Roy CohenEd Seglias, and Jackson Nichols at the Sheet Metal and Air Conditioning Contractors National Association (SMACNA) Mid-Atlantic Chapter in Greenbelt, MD for their presentation, “Ignorance is not Bliss: Construction Contract Provisions You Need to Know.” They will discuss provisions that allocate risk for different site conditions, and examine contract provisions addressing payment, indemnity, change orders, and termination. Their presentation will also cover Mechanic’s Liens in DC and Maryland.

For more informationa, and to register for this event, please visit the SMACNA Mid-Atlantic website.

Roy S. Cohen is the Founder and President of Cohen Seglias, as well as a Shareholder and member of the Board of Directors. In his practice, Roy represents clients involved in every facet of the construction industry, including construction managers, general contractors, municipal authorities, private developers, major trade contractors, architects, engineers and sureties.

Ed Seglias  is the Vice President of Cohen Seglias as well as a Shareholder and a member of the Board of Directors. He is also the Managing Partner of the Firm’s Delaware office and a Partner in the Firm’s Construction Group. Ed concentrates his practice in construction law and commercial litigation and has successfully tried numerous construction and commercial cases in the mid-Atlantic region.

Jackson S. Nichols is an Associate in the Firm’s Commercial Litigation and Construction Groups and represents clients in every stage of litigation, including motion practice, discovery, pre-trial preparation and trial practice and appeals. As a member of the firm’s Commercial Litigation group, Jackson assists clients in developing solutions to business disputes.

 

OSHA Continues Delayed Enforcement of Confined Space Standard for Residential Contractors

Posted in Construction, Project Management

As we discussed last summer, the Occupational Safety and Health Administration (OSHA) issued a new Confined Space in Construction Standard, which went into effect on August 3, 2015 and required heightened training, continuous worksite evaluations and communication for all construction workers performing work in manholes, crawl spaces, tanks and other confined spaces not intended for continuous occupancy that are located on construction projects.  Enforcement of the new standard was postponed through October 2, 2015 for all contractors covered by the standard to provide additional time to train and acquire necessary equipment.  In October 2015, OSHA further extended the temporary enforcement delay through January 8, 2016, but this time limited the extension to contractors performing residential construction work, which includes those contractors working on single-family homes, duplexes and townhouses.  The extension did not apply to contractors working on multi-unit apartment buildings.  Earlier this month, OSHA issued a memorandum that again extended the delayed enforcement of the standard through March 8, 2016 for residential construction work.

Under the delay policy, OSHA will not issue citations to contractors engaged in residential construction work if the contractor is making good faith efforts to comply with the confined space standard, as long as the contractor complies with either the training requirements of the new standard, found at 29 CFR 1926.1207, or the former training requirements, found at 29 CFR 1926.21(b)(6)(i).

Factors considered by OSHA to determine if a contractor is engaged in good faith compliance efforts include:

  • If the contractor has not trained its employees as required under the new standard, whether the employer has scheduled such training;
  • If the contractor does not have the equipment required for compliance with the new standard, including personal protective equipment, whether the contractor has ordered or otherwise arranged to obtain such equipment required for compliance and is taking alternative measures to protect employees from confined space hazards; and
  • Whether the contractor has engaged in any additional efforts to educate workers about confined space hazards and protect workers from those hazards.

Full enforcement of the confined spaces standard for non-residential contractors remains in effect, and those contractors should continue to comply with the standard’s requirements.  We will continue to monitor the enforcement of the standard for residential projects.

Lisa M. Wampler is a Partner in the Construction Group of Cohen Seglias Pallas Greenhall & Furman PC. She has an active and diverse construction litigation practice and represents owners, general contractors, construction managers and the different trades in complex matters involving all phases of the construction process.

Lori Wisniewski Azzara is an Associate at Cohen Seglias Pallas Greenhall & Furman PC. Lori practices in the areas of construction and commercial litigation and has experience in contract negotiation, claims for delay and inefficiency, mechanics’ liens, and all types of contractual dispute.