Month: April 2016

U.S. Department of Labor Issues Proposed Rule on Mandatory Paid Sick Leave for Federal Contractors

Authored by Anne Bibeau

The U.S. Department of Labor (DOL) has published a Notice of Proposed Rulemaking (NPRM) to implement President Obama’s Executive Order (EO) 13706, “Establishing Paid Sick Leave for Federal Contractors.” The EO requires that for federal contracts issued on or after January 1, 2017, federal contractors and subcontractors must provide their employees “not less than 1 hour of paid sick leave for every 30 hours worked on or in connection with covered contracts,” up to 56 hours of paid sick leave per year. In the NPRM, DOL describes the rules and restrictions regarding the accrual and use of paid sick leave.

The EO’s paid sick leave requirement applies to work on or in connection with “covered contracts,” meaning federal contracts and subcontracts subject to the Davis-Bacon Act (DBA) and the Service Contract Act (SCA), as well as federal contracts for concessions and for services on federal property. Employers must provide the paid sick leave to both FLSA-exempt and non-exempt employees. Recognizing that employers typically do not track hours exempt employees’ hours worked, the NPRM provides that the employer may assume that for purposes of calculating paid sick leave its exempt employees worked 40 hours on or in connection with a covered contract each week.

Significantly, the paid sick leave required by the EO is in addition to the contractor’s obligations under the SCA and DBA. The contractor will receive no credit toward its fringe benefit or prevailing wage obligations under those laws for providing the paid sick leave mandated by this EO. A contractor’s existing paid time off policy may satisfy the requirements of the EO only if the paid time off meets all of the EO’s requirements for paid sick leave.

Under the NPRM, any unused paid sick leave must carry over from one accrual year to the next. A contractor is permitted to, but not required, to pay out used paid sick leave upon termination of employment; however, if the contractor rehires the employee within 12 months, the contractor must reinstate his or her accrued paid sick leave regardless of whether it was paid out previously.

The employee is entitled to use the paid sick leave for: their own illnesses and other health care needs; the care of a family member or loved one who is ill or needs health care; or purposes resulting from being the victim of domestic violence, sexual assault, or stalking, or to assist a family member or loved one who is such a victim. The NPRM broadly defines the relations for whom an employee may use paid sick leave to include the employee’s child, parent, spouse, domestic partner, or “any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.”

An employee who wants to use accrued paid sick leave should make a request at least 7 calendar days in advance, if the need for leave is foreseeable, or as soon as practicable if the need is not foreseeable. The employer can require that the employee provide information to establish that the absence qualifies for paid sick leave, and if feasible, the anticipated duration of the leave. However, the employer may not require certification from a health care provider or documentation to prove a claim of domestic violence, sexual assault, or stocking unless the employee uses 3 or more full days of leave consecutively.

The DOL will publish a notice that employers must post notifying their employees of their rights to paid sick leave. In addition, the NPRM requires that employers notify their employees of their accrued paid sick leave balances at least once a month, as well as whenever the employee asks for that information or asks to use paid sick leave and when the employment is terminated.

Federal contractors should review their leave policies now to minimize any conflicts with the EO’s requirements and to prepare for the EO’s implementation in 2017.

This article is meant to bring awareness to this topic and is not intended to be considered legal advice.

Bill Franczek Selected for Admission into the Fellowship of the College of Comercial Arbitrators

Vandeventer Black is pleased to announce that Bill Franczek has been selected for admission into the Fellowship of the College of Commercial Arbitrators. Established in 2001, the College is a national organization of commercial arbitrators whose professional training and experience qualify them to undertake the most complex and difficult arbitration assignments. The College is comprised of approximately 250 nationally and internationally recognized commercial arbitrators recognized for excellence in their field.

Supreme Court of Virginia Clarifies Scope of Contractors’ Potential Liability for Design Defects

The Supreme Court of Virginia recently addressed construction contractors’ potential liability for damages caused by design defects. In William H. Gordon Associates, Inc. v. Heritage Fellowship Church, a church hired an engineering firm to design a rain tank system to provide storm water management for a new sanctuary. The system was designed to be buried underground and paved over for use as a parking lot.

Shortly after installation, the rain tank and parking lot above it collapsed. The church sued the general contractor and engineer for damages caused by the collapse, including the cost to install a new storm water management system. The trial court found that the collapse was caused solely by the engineer’s failure to design the system in accordance with the applicable standard of care.

On appeal, the engineer claimed that under the terms of the construction contract, the contractor assumed liability for the failure because it incorporated the engineer’s design into its submittals. The Supreme Court of Virginia disagreed, finding that the general contractor was not liable since it built the system in accordance with the engineer’s plans. In reaching its decision, the Court noted that the design was not a “performance-type” specification that required the general contractor to perform additional design work to provide a finished product. In fact, the contract specifically prohibited the contractor from making any design changes without the engineer’s express written consent.

Although this decision reinforces the legal rule known as the Spearin Doctrine, which provides that a contractor is not liable to an owner for loss or damage resulting solely from defects in the plans, design, or specifications provided to the contractor, it also suggests that in Virginia, there may be exceptions to the Spearin Doctrine where a contractor:

  • Agrees to accept liability for the design;
  • Makes unauthorized changes to the design; or
  • Performs its work based on a “performance” specification or otherwise provides design services for the project

To protect themselves against claims relating to design defects, construction contractors should not deviate from approved designs without express authorization from the owner and designer. Additionally, contractors always should employ licensed design professionals whenever design work—including design changes—is necessary.

This article is meant to bring awareness to this topic and is not intended to be used as legal advice.

Highway Projects Affected by Cargo Preference Act Changes

By Memorandum dated December 11, 2015, the Federal Highway Administration (FHWA) changed the FHWA’s legal position regarding applicability of the Cargo Preference Act (CPA) to federally-funded highway projects. That Memorandum reversed and superseded contrary position in place since 1988.

The Law. Congress passed the CPA in 1954 to promote a U.S. maritime transportation system. The CPA’s policies are intended to provide a revenue base that will retain and encourage a privately-owned and operated merchant marine. The CPA achieves these goals by requiring “at least 50 percent of any equipment, materials or commodities procured, contracted for or otherwise obtained with funds granted, guaranteed, loaned, or advanced by the U.S. Government . . . [to] be transported on privately owned United States-flag commercial vessels, if available.”

The Change. The CPA’s 50% requirement is interpreted as applying to federally-financed highways – including state projects with federal funding. But there is an exception if the goods or materials are independently acquired. For example, fabricated steel, tunnel boring machines, large-capacity cranes, and other goods or materials bought specifically for FHWA funded projects must comply with the CPA transportation requirements; however, compliance is not required for shipments of cement, asphalt, or other materials regularly purchased to replenish existing inventories.

Implementation. The FHWA has directed implementation of the change for all federal-aid projects awarded after February 15, 2016. Pending development of FHWA-specific clauses, the recommended clauses in 46 CFR 381.7(a)-(b) are expected to be incorporated by reference into the federal-aid projects.

The Impact. Contractors must now consider whether federal-aid projects will require CPA compliance, including associated logistical coordination and cost implementation into bids and proposals. Practically, CPA will still not apply to many projects since most materials will not require maritime transportation, and project Buy America Act (BAA) requirements may further dampen CPA impact absent presidential waiver of the BAA. . But, as companies consider their options regarding foreign sources of specially-purchased equipment and project materials, CPA compliance requires attention.

For more information regarding the CPA or other government or construction contracting matters, Vandeventer Black’s Construction and Government Contracts Team attorneys are poised to help our clients navigate those needs.

This article is meant to bring awareness to this topic and is not intended to serve as legal advice.

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