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Philadelphia Construction Law Blog

Construction Group Partner Josh Quinter to Speak at MetalCon 2016

We are excited to announce that Josh Quinter, a partner in our construction practice group, will be speaking at MetalCon 2016. He will be presenting his program entitled "Documenting Your Project to Get Paid" on both October 26, 2016, and October 27, 2016, to a national audience of owners, contractors, subcontractors, and suppliers in the metal building industry.

MetalCon logo.png

MetalCon is an annual gathering of professionals in the metal building industry. It includes course and program offerings on a multitude of subjects, floor exhibits to introduce new technologies and ideas in the industry, and networking opportunities to meet some of the most experienced and knowledgeable people in the industry.

Josh has become a regular on the speaking circuit because of his unique ability to explain complex issues in simple terms and then provide practical applications for the information offered in his programs. He has been asked to speak on a wide range of topics from leadership to project management to various construction law issues. We are certain the attendees will find his most recent offering both enlightening and entertaining.

OSHA Fines Increased As Of August 1, 2016

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

President Barack Obama recently signed into law a bill that significantly increases the penalties relating to certain violations of the Occupational Safety and Health Act. Labelled as a "catch-up adjustment", the new law increases the maximum fines associated with OSHA violations by 78%. An adjustment to the fines was last made in 1990.

More specifically, the increase was measured as the difference between the Consumer Price Index in October 1990 and October 2015. This 15 year period explains the substantial increase. The statute also ties the maximum fines to inflation based on the Consumer Price Index going forward so that a new law does not have to be passed annually to increase the fines.

This change marks a significant adjustment in terms of gross dollars about which construction businesses should be aware. For example a "Serious - Other Than Serious Posting Requirement" violation goes from a maximum fine of $7,000 to $12,471. "Willful" or "Repeat" maximum fines go from $70,000 to $124,709.

These changes are part of OSHA's field manual already and are in effect. Accordingly, the ramifications for failing to meet OSHA standards are significantly more severe than they have ever been.

NEW PHILADELPHIA WAGE THEFT LAW TAKES EFFECT

Posted by:  Andy Cohn  (acohn@kaplaw.com)

A new Philadelphia ordinance, effective July 1, 2016, will have a significant effect on employers who fail to pay wages to their employees for work performed in Philadelphia. Titled Wage Theft Complaints, the ordinance provides for administrative and court remedies, and penalties for "wage theft", defined by the ordinance as any violation of the Pennsylvania Wage, Payment and Collection Law, Minimum Wage Act, or any other federal or state law regulating the payment of wages, for work performed in Philadelphia.

The ordinance applies to unpaid wage claims in an amount between $100 and $10,000. It allows a "claimant" to file a claim with a "Wage Theft Coordinator", a new administrative office to be administered by the City's Managing Director's Office. A claimant is defined as either an employee with an unpaid wage claim, or an "authorized organization" on behalf of the employee. An authorized organization can include a labor union or other organization or party acting on behalf of an employee. After the employer files an answer to the complaint, the Coordinator conducts an investigation and is to provide a written adjudication within 60 days, or 110 days after the complaint is filed, if no answer to the claim is filed.

The complainant's burden of proof is merely to present "sufficient evidence" to show the amount of work performed and the amount of unpaid compensation due. It meets its burden if the employer is required to keep records of hours worked and compensation paid, but does not do so, or if the records are imprecise or inadequate. Subpoena power is granted to the wage theft coordinator to subpoena documents from any party to the complaint.

If an adjudication of wage theft is made, a written order requiring payment will be issued, which includes findings of fact and conclusions of law. The adjudication may be appealed by either party to a court of competent jurisdiction within 30 days by filing a "new lawsuit". However, the ordinance provides that the investigative notes, documents, and complaint and answer will be provided to both parties on any appeal. Significantly, the ordinance also creates a private right of action, allowing a claimant to file an action directly in court to enforce rights under the ordinance, without first bringing a claim before a Wage Theft Coordinator.

Get Ready For Our Fall Seminar Series!

On the heels of our successful Spring Seminar Series, Kaplin Stewart's Construction Law Group is in the process of planning its next program offering. Our Fall Seminar Series will follow a similar set-up to our Spring Seminar Series and offer some great new topics. We will have another announcement in the near future with more details, but here are some of the particulars.

Week of September 12, 2016

Robert Korn and Kevan Hirsch will provide some valuable information on Mechanic's Lien Claims, including the soon to go into effect changes to that law.

Week of October 3, 2016

Andy Cohn and Sandy Feltes will share their insights on how insurance coverage works for construction defect claims.

Week of October 24, 2016

Bill Auxer and Karin Corbett will walk attendees through the OSHA citation process and how the administrative "court system" works when citations are challenged.

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It should be another great series of programs full of a lot of new and useful information. We hope you will start making plans to come out and join us!

WE HAVE A GREAT CONTRACT, SO WHY ARE WE STILL DEALING WITH CLAIMS IN COURT? (Part 2 of 3)

Part 2 of a 3 part series on risk management

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

My previous post in this series addressed the most obvious reason why a construction company's contract is not keeping it out of court: the contract simply isn't good enough. It bears repeating that no contract is perfect; and even the best contracts, which allocate risk as opposed to eliminate it, can't prevent every possible lawsuit. Because the contract itself cannot completely insulate a company from litigation, the next logical question becomes whether there is anything else that can be done.

Another issue to consider is among the most basic (as opposed to the most obvious). Leadership - in both the individual and collective sense - has a huge impact on risk management and, as a result, the bottom line. While there are too many facets of leadership to cover in one blog post, mention of a few parts of the foundation of good leadership will go a long way to setting the type of culture necessary to help avoid claims and litigation. Note, however, that I did not say avoid disputes. Parsing these two concepts out is both intentional and important since disagreements are both inevitable and healthy if approached the right way.

Abraham Lincoln.pngOne of the keys to avoiding litigation is to establish a culture which emphasizes being positive, problem solving, and putting customers first. The companies that avoid litigation don't just talk about these things. The companies that avoid litigation live these things every day. These values are embedded in the company's culture because the leaders in the group emphasize them and lead by example. These core principals guide everything they do. As a result, trust is established and the people they work with begin to emulate those same characteristics.

Here are some of the leadership traits that can really help create a culture which avoids litigation while encouraging growth:

WE HAVE A GREAT CONTRACT, SO WHY ARE WE STILL DEALING WITH CLAIMS IN COURT? (Part 1 of a 3)

Part 1 of a 3 part series on risk management

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

In my years as a construction attorney, I have had countless conversations with contractors who are frustrated by the "drag" created by litigation. Many of those with whom I have spoken have expressed confusion over the fact that their contract - perhaps even one prepared by a lawyer - is good and should be keeping them out of Court; and they cannot understand why they still find themselves in costly and time consuming litigation. This 3 part series will endeavor to provide some answers to this dilemma and some ideas about how to cut down on some of that frustration.

construction contract.jpgThe first issue to consider is the most obvious one: perhaps the contract is not as good as you think. If this ends up being part of the answer, the problem usually manifests itself in one of two ways. The first is that the contract was last updated 5 years ago or longer. The second example is that the contract is one prepared for another type of work. No matter which form the problem comes in, it has one common thread. The contract does not fit the situation.

Despite efforts by companies and lawyers to make the contracting process more efficient by developing form contracts, there is no perfect "one size fits all" agreement. To be clear, this does not mean that form contracts are bad. It means they come, like many other decisions in the construction business, with risk. Each project has its own unique elements and nuance. Using the same contract that worked for a company on a great project 7 years ago may not be helpful on a newer job; and that contract you borrowed from a company that successfully completes small residential carpentry jobs will be hard to use for a large commercial mechanical project.

The Bester v. Essex Crane Problem: What is it?

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

One of the most misunderstood concepts in construction contracts is the interplay between indemnification clauses and the immunity provided for employers under the Pennsylvania Workers' Compensation Act. Because it is almost always the case - emphasis on almost - contractors and subcontractors assume they are immune from further liability as soon as payments are made to an injured employee under the workers' compensation policy. The statute and Pennsylvania case law, however, say otherwise.

fall hazard sign.pngMost lawyers familiar with this area of the law refer to this issue as the Bester v. Essex Crane problem. This arises from the seminal case on when workers' compensation immunity is waived by way of contract. At the risk of oversimplification in favor of brevity, the Workers' Compensation Act in Pennsylvania provides that an employer may waive the immunity provided under the statute in a contract. The Courts have clarified the requirements to meet this waiver and settled on the premise that the language in the contract must set forth accurately and very clearly that the party waiving its immunity is doing so. Stated differently, the Court wants to be sure that the employer is knowingly waiving the immunity before it enforces such a clause.

In practical reality, the situation typically plays out in a contract-subcontractor context where an employee of the subcontractor is injured while working on a project. The subcontractor then pays workers' compensation benefits to its injured employee. The employee then sues the general contractor and the owner (not the immune employer) for failing to keep the job site safe. Relying on its contract, the general contractor then joins the employer/subcontractor to the lawsuit claiming the subcontractor owes it contractual indemnity and the Bester v. Essex Crane problem become central to the case. Because there is usually a separate but related clause requiring the subcontractor to name the contractor as an additional insured, there is a parallel fight regarding this issue (more on that in another post).

On Memorial Day, We Remember

At Kaplin Stewart, we recognize that America is great because of the people that serve her and its people.  Those who work in the military, the police, and as firefighters are among our nation's finest.  They put their lives on the line every day to protect us all - asking for very little in return.  Some - who we especially remember on Memorial Day - pay the ultimate sacrifice by laying their lives down in the line of duty.  For that, we are eternally grateful. We could never repay that debt.  Thank you for your service and sacrifice.

$45 Million Project Proposed In Allentown

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

The Neighborhood Improvement Zone, otherwise known as the "NIZ" in the Lehigh Valley, is serving as the springboard for another large development in downtown Allentown. J.B. Reilly is planning to build a $45 million 12 story office project in the NIZ by 2018.

Called Tower 6, the project will be built at the corner of Hamilton and Sixth Streets in Allentown. The plan presented to the Allentown Neighborhood Improvement Zone Development Authority Board calls for 145,000 square feet with 11 floors of office space. The ground floor is presently designed to contain retail space that would make the project mixed use.

This project presents one of the first new construction office spaces within the NIZ. Plans will be submitted separately to Allentown's Planning Commission and site plans are already begin developed.

A quick fix to help the construction industry make more money

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

People working in the construction industry, like any other business enterprise, are in it to make money. While some enjoy their work and get "payment" in the form of loving what they do, we don't need to take a poll to know that participants in the construction industry would all be agreeable to making more money.

IRS Logo.pngThe numbers suggest that the construction economy is recovering since the crash in 2008. It remains a matter of debate among the experts as to the rate of the recovery and whether it has recovered completely. If one were to rely on circumstantial evidence though, it would seem safe to assume that the recovery has not proceeded at a rate that anyone prefers. This might be due to one simple fact: taxes.

A recent Treasury Department report ranks the construction industry as having the highest effective tax rate of any industry. The construction industry pays an effective corporate tax rate of 30.3%. The majority of other corporations pay closer to a 23% rate. This results from various tax breaks provided to other industries to lower the statutory corporate tax rate of 35%. This rate discrepancy becomes even more pronounced when one considers that many construction companies are S-Corporations that file their "corporate returns" as part of their personal tax returns.

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