The National Labor Relations Board determined that a construction company committed unfair labor practices by firing two electricians after a dispute concerning the company’s new “break in place” policy. The electricians were upset after the company began requiring employees to take their 15-minute breaks at their workstation instead of retreating to nearby “dry shacks.” The company changed its policy because 15-minute breaks were turning into 25 and 30 minute breaks.

The day the new policy was implemented, the electricians took their morning breaks in the dry shacks as usual. An electrical supervisor stopped by various work areas to warn the electricians that they would be written up for continued violations of the policy. According to the opinion, the two electricians responded by stating that it “was going to get ugly” if they were terminated.

In determining whether the electricians’ remarks fell under protected activity, the board looked at the four factors set forth in Atlantic Steel Co., 245 NLRB 814 (1979). These factors are used to distinguish “opprobrious” behavior, which lacks protection from the National Labor Relations Act, from protected behavior. The four factors are the place of discussion, the subject matter of the discussion, the nature of the employee’s outburst, and whether the outburst was provoked by the employer’s unfair labor practice.

Because the employer distributed the warnings in front of other employees in a work area and during work time, it was expectable for the electricians to protest the warning in the same arena. Likewise, the subject matter under discussion factor weighed in favor of protection under the second factor because the remarks were “directly related to the electricians’ union-supported protest.” The third Atlantic Steel factor weighs in favor of protection in this case because the electricians’ outbursts were spontaneous outbursts not “premeditated and sustained personal threats.” Finally, in analyzing the fourth factor, the board noted that the electricians’ conduct was not provoked by an unfair labor practice, just a new policy.

The board ordered the construction company to reinstate the electricians and repay their lost earnings and benefits.

Click here to read the NLRB's opinion in its entirety.

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Recently a resigned foreman filed a whistleblower action alleging that a contractor defrauded the government by billing for substandard or defective work on a new US Embassy in Baghdad. According to the foreman’s allegations, the contractor billed for inadequate concrete work and overstated the amount of work completed on payment invoices.

The circuit court determined that the False Claims Act (FCA) is only concerned with fraud, not ordinary contract matters. First, the court found that the concrete work was not substandard because the contract itself anticipated subsequent minor repairs. Further, government inspectors frequented the job site and approved the contractor’s work, contradicting the claim of fraud or falsity.

As to the foreman’s second claim, the court found that it is industry standard to estimate the completed percentage in progress payments. The contract once again shines light on the discrepancy by providing that progress payments would be made “on estimates of work accomplished.” The foreman was unable to provide any evidence or first-hand knowledge that the estimates were falsified. 

Because the disgruntled foreman failed to show that the contractor knowingly engaged in fraudulent conduct that was material and cost the government money, his FCA claim failed. The court refused to align these contractual disagreements with false claims under the FCA.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

The Occupational Safety and Health Administration (OSHA) fined Whitesell Corporation over three million dollars and cited the corporation for 72 safety and health violations after a worker was seriously injured in an Alabama factory. According to the OSHA news release on September 1, “Whitesell willfully tampered with the safety mechanisms of its hydraulic forging presses at its Tuscambia plant to speed up production, resulting in the amputation of a worker’s hand.”

Originally, OSHA conducted inspections of only the Tuscambia plant, but after finding substantial safety concerns, the inspection was expanded to also include Whitesell’s Muscle Shoals Plant. Among other things, Whitesell bypassed safety mechanisms and failed to utilize mechanical guards on its equipment, thereby exposing its workers to serious bodily danger. 

“Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA's role is to assure these conditions for America's working men and women by setting and enforcing standards, and providing training, education and assistance. For more information, visit http://www.osha.gov.”

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

The South Carolina Supreme Court held in W & N Constr. Co. v. Williams that the contract between an unlicensed general contractor and owner was void and unenforceable under South Carolina law. 322 S.C. 448, 472 S.E.2d 622 (1996). S.C. Code Ann. § 40-11-10, 40-11-100, and 40-11-290  make it illegal for a general contractor without a license to undertake construction in excess of $30,000. 

In this case, the general contractor lost its license five years prior when it failed to pay taxes. Subsequently, the contractor entered into an agreement to perform $60,000 worth of commercial work for the owner. After completing the agreed upon work, the contractor filed a mechanics lien action to collect the unpaid balance of $30,481.89. Because this amount exceeded $30,000, the South Carolina Supreme Court refused to uphold the contract. 

The court based its rationale on the policy implications underlying the relevant licensing statutes. In short, the statutes exist to protect the public and it would be unjust to allow unlicensed contractors to circumvent these licensing requirements, even when that means voiding an otherwise valid contract.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

On July 12, a California appellate court upheld summary judgment for a subcontractor in a condo defect case.  The court found that the condo association and general contractor failed to identify the subcontractor’s involvement in any of the alleged construction defects, which included decay, water intrusion, and mold growth. The condo association originally sued the company that owned the condo complex, and later added the general contractor to the suit. The general contractor filed a cross-complaint and joined several subcontractors into the action seeking indemnity. 

The court determined that the complaint did not specifically reference any misconduct on the part of the subcontractor, a drywall supplier and installer, therefore there was no obligation for the subcontractor to indemnify the general contractor. Indemnity is a duty to reimburse any loss, damage or liability incurred by another, and typically stems from a contractual relationship. In this situation, the indemnity clause in the contract between the subcontractor and general contractor provides that the subcontractor will indemnify the contractor against any claim of defect in the drywall or its installation. Because the complaint and cross-complaint failed to implicate the subcontractor, it had no duty to indemnify the contractor.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

The Occupational Safety and Health Review Commission recently overturned its 2007 decision in Summit and announced that a nonexposed, controlling employer on a multiemployer worksite is liable for Occupational Safety and Health Administration (“OSHA”) violations. The Court of Appeals for the Eighth Circuit overturned the Commission’s decision in Summit in February of 2009. The Commission’s recent decision also involved Summit Contractors, the general contractor in both instances. Likewise, in both Summit cases a subcontractor was working in the area of the OSHA violation and Summit had very few supervisory employees in place.

Specifically, the Commission addressed the OSHA terminology in 29 C.F.R. § 1910.12(a) which states that “[e]ach employer shall protect the employment and places of employment of each of his employees engaged in construction work by complying with the appropriate standards prescribed in this paragraph.” The Commission, like the Eight Circuit in the first Summit case, interpreted this to mean that the employer is required to protect not only his or her own employees, but also other employees at the worksite. 

By placing the responsibility for total workplace compliance on controlling employers, the result should be a safer workplace for all employees. Here is a link to the full text opinion. 

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

On July 15, A Michigan appellate court determined that since the parties’ arbitration agreement did not specifically exempt the issue of rescission of the purchase contract, that issue is arbitrable.  Meneghel v. Mondrian Properties Weston Downs, LLC , No. 291105, Mich. App.; 2010 Mich. App. LEXIS 1376 . The Plaintiffs in this case purchased a new-construction condominium from Mondrian. The parties signed a purchase agreement, which included an “Arbitration and Claims” clause compelling the parties to arbitrate any construction defect dispute worth more than $2,500.

The Plaintiff purchasers arranged for two inspections after construction was completed, but before closing. The inspections revealed various construction defects; thus the purchasers informed Mondrian that they wished to rescind their purchase contract. Mondrian refused to comply with this request and the Plaintiffs brought suit for rescission of the purchase agreement, breach of contract, negligent construction, violation of public policy, violation of consumer protection law, fraudulent inducement and declaratory judgment. Mondrian moved to compel arbitration, which the trial court denied. 

On appeal, the appellate panel noted that an issue is arbitrable if an arbitration provision exists, the disputed issue is arguably within the scope of the arbitration provision, and there is no express exemption of the issue from the arbitration provision.  In a word, since there was no express exemption of the issue of rescinding the contract, the parties must arbitrate. 

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

The court in Fields v. J. Haynes Waters Builders held that contractors are not subject to strict liability for construction damages. 376 S.C. 545, 658 S.E.2d 80 (2008). In Fields, subsequent homeowners filed suit against the homebuilder for damages related to moisture intrusion in their home. Id. at 552. The homeowners hired an attorney who put them in contact with building inspectors and investigators. Id. The inspections revealed that the water intrusion and related structural damage was caused by the synthetic stucco material, known as exterior insulation and finish system (E.I.F.S.), used in the construction of their home. Id. The homeowners asserted eight causes of action against the builder, including strict liability. Id. at 55. 

South Carolina’s strict liability statute provides that "[o]ne who sells any product in a defective condition . . . is subject to liability for physical harm caused to the ultimate user or consumer, or to his property, if [t]he seller is in the business of selling such a product." S.C. Code Ann. § 15-73-10 (2009). Because the court held that general contractors provide a service and are not in the business of selling products, they are immune from the strict liability statute. Fields, 376 S.C. at 565. This is true "even though the result of the [contractor's] service is to supply a structure or building to the owner." Id. 

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.