Month: July 2016

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Practicing Without A Contractor’s License: More Than A Slap On The Wrist

LAW TIPS

Becoming a licensed general contractor is often a long and tedious process.  The applications can be lengthy and invasive, multiple reference letters may be required, and supplemental documents may need to be obtained.  The process is often mistakenly viewed as a clerical exercise without due respect to the ramifications that can accompany the lack of licensure or omissions in the application process.

Contrary to common belief, the consequences of engaging in the practice of general contracting without a license are not limited to a slap on the wrist from the licensing authorities.  Instead, there can be substantial criminal penalties.  For example, the unlicensed practice of general contracting, the attempt to practice contracting, the use of or attempted use of the license of another, or the provision of false evidence when applying for a contractor’s license each constitute a Class 1 misdemeanor.  These crimes may also be punished by a fine of $500 per day for each day of the violation.

Furthermore, a project owner may be allowed to withhold payment if he or she learns of the lack of licensure.  Specifically, if an unlicensed contractor provides services with knowledge of his or her licensing requirements, his or her contract may be deemed void, including the provision of the contract requiring payment.  In fact, if a contractor who was previously licensed fails to renew his or her license, a court will assume that the contractor had actual knowledge of the licensing requirements, unless proven otherwise.

Applying for a contractor’s license is not an easy or inexpensive process.  The application paperwork can be tedious and there are substantial fees.  However, the costs of practicing without a license are substantial and should not be taken lightly.

If you would like to receive more information regarding this article, please contact the authoring Attorney.

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Not Registered with SAM? New Proposed Rule Would Preclude Offers

The System for Award Management (SAM) is a federal online portal providing contracting officers various informational access about companies doing business with the federal government. Under a new rule, DOD, GSA and NASA contractors must be registered in SAM prior to submitting offers or quotes.

Additionally, the new rule will require contracting officers to use the name and physical address from contractor’s SAM registration.

More information about the proposed rule is available as of the posting of this blog by Clicking Here.

 

Virginia Supreme Court Confirms Employee Firings on the Spot

Law Tips

Authored by Neil S. Lowenstein

In a recent opinion involving a fired realtor, the Virginia Supreme Court confirmed that at-will employees can be fired on the spot, without any prior notice to the employee. The decision was unanimous, and noted that while the firing notice “must be reasonable,” advance notice was not required because, among other things, that would be contrary to the flexibility at the heart of the at-will employment doctrine and undermine the indefinite duration which is implicitly an element of at-will employment.

In Virginia, unless the employer and employee agree otherwise, employment is “at will,” meaning that either the employer or employee may end the employment relationship at any time and for any (legal) reason, upon “reasonable notice.” The plaintiff in Johnston v. William E. Wood & Associates, Inc. argued that “reasonable notice” meant advanced notice. The Virginia Supreme Court shot down that argument, holding that to be “reasonable,” notice of the termination need only be effective notice. In other words, the employer only has to make clear to the employee that the employment relationship has ended, so that the employee knows to stop work. Advance notice of the termination is not required unless the employer has promised to give advance notice or the federal WARN Act, which addresses mass layoffs and plant closings, applies.

The court’s decision was not a change in the law, but blocked a determined effort by plaintiffs’ attorneys to chip away at the at-will employment doctrine, which is already circumscribed by other laws limiting the reasons for employment termination. As before, employers need to be mindful that their employee policies, handbooks, offer letters, and other communications with their employees—both written and oral—do not promise or imply that the employment relationship will last for a particular period, or that the employee will only be fired for cause or after advanced notice. Employers should consult with an employment attorney about whether to require employees give advance notice of resignation. The best practice is to emphasize that the employment is at-will and can end at any time and for any reason.

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Be wary of of increasing claimed IRS Agent phone calls

Vandeventer Black law partner and tax law practitioner Geoff Hemphill recently relayed a personal experience that others are also increasing seeing involving scam phone calls from persons claiming to be an “IRS Agent” and claiming that the individual owes back taxes. The fake IRS Agent then says the call is the last chance to pay the back taxes before the IRS files a lawsuit.

Geoff notes that the IRS does not make such calls, and that legitimate IRS contact comes through official written correspondence, with accurate reference to the individual’s mailing address, giving notice of the assessed liability, appeal rights, and warnings of impending enforcement. So, the chances are high that any phone call from anyone purporting to be an IRS agent is a scam.

If you receive legitimate correspondence from the IRS it is important to promptly address it, and to seek legal counsel in appropriate circumstances to help you evaluate the assessed liability, to understand your rights, and to develop responsive strategies. Geoff in the example of the type of experienced tax attorney that can provide that type of legal counsel. But there is no need to lose sleep respecting such phony “IRS Agent” phone scams and it is important to not succumb to providing personal information or monies to those types of scammers.

SBA Issues Final Rule Regarding Affiliation Calculation of Annual Receipts Limitationson Subcontracting and Joint Ventures

Authored by Neil S. Lowenstein

In its Final Rule issued May 31, 2016, the Small Business Administration issued rules implementing the 2013 National Defense Authorization Act. The Final Rule has a myriad of aspects applicable to awards in various small business programs, and this short summary is not intended to address them all; but rather instead this summarizes some of the provisions regarding affiliation, calculation of annual receipts, limitations on subcontracting and joint ventures.

Affiliation:
The Final Rule expressly allows certain arrangements without establishing affiliation, while precluding others subject to rebuttable presumptions; including:

  • Small Business Teaming Arrangements are allowable without regard to affiliation for “bundled contracts” so long as each team member is small for the size standard assigned to the contract or subcontract.
  • Firms owned or controlled by married couples, parties to a civil union, parents, children, and siblings are presumed affiliated if they conduct business with each other or share or provide loans, resources, equipment, locations, or employees; although the presumption can be overcome by showing clear lines of fracture between the concerns.
  • SBA may presume identity of interest based on economic dependence if 70% or more of receipts over the previous 3 fiscal years are derived from another concern; although
    • the presumption is rebuttable by showing lack of sole dependence; and
    • business concerns owned and controlled by an Indian Tribe, ANC, NHO, CDC, or wholly owned entities of an Indian Tribe, ANC, NHO, or CDS, are not considered affiliated by another concern owned by that entity based solely on the contractual relationship between the two concerns.

Calculation of Annual Receipts:
The Final Rule defines how SBA will calculate annual receipts when determining size. In short, receipts include all revenue (including passive income) from whatever source received or accrued; generally meaning the concern’s total income (or gross income for sole proprietorships) plus the cost of goods sold as defined and reported to the IRS. Exclusions are identified in the Final Rule.

Limitations on Subcontracting:
Compliance is now determined by a percentage cap on the total amount of the prime contract paid to first tier subcontractors that are not “similarly situated” entities, instead of the previous limitation based on  costs. A similarly situated entity is a small business that participates in the same SBA program that qualified the prime contractor as an eligible offeror.

There is no requirement to apply the prime contract NAICs code to subcontracts. Instead, the prime contractor assigns the code applicable to the scope of work on each subcontract. The percentage limits set by statute are:

  • 85% for general construction contracts;
  • 75% for specialty trade construction contracts; and 50% for service and supply contracts.

The method for calculating compliance with the limitations is complex, depends on whether the contract is for construction, supplies or services, or mixed supplies and services. Among other things, the cost of materials is typically not included, and there are exceptions when “nonmanufacturers” supply the product of a domestic small business manufacturer or processor.

While work done by a similarly situated first tier subcontractor does not count toward the limitations, any work that a similarly situated subcontractor further subcontracts will count towards the limitation.

Joint Ventures

The Final Rule allows a joint venture to qualify as small for any government procurement when each partner to the joint venture qualifies individually as small under the size standard corresponding to the NAICS code assigned by the government in the solicitation.

Recertification:

Under this Final Rule, when an acquisition or merger occurs after the offer date but prior to award the offeror must recertify its size to the contracting officer prior to award.

If you would like to receive more information regarding this article, please contact the authoring Attorney.

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