Midwest Construction Law Blog 
Thursday, March 11, 2010
April 22 Deadline Approaches for Contractors to Obtain EPA Lead Renovation, Repair and Painting Certification
This is a must read for all of you contractors or wanna-be contractors out there. There will be a new federal law starting April 1, 2010 that requires certification under a new EPA program for renovated, repair and/or paint projects.
http://yosemite.epa.gov/opa/admpress.nsf/names/r07_2010-3-11_epa_lead_renovation_deadline
Posted By:
David C. Seitter
on
Thursday, March 11, 2010
Friday, March 05, 2010
House passes $15 billion jobs bill
After stalling briefly, the Democrats' jobs agenda regained momentum on Thursday as the House passed one measure designed to boost employment and the Senate pressed forward on a more ambitious bill that is expected to come to a vote next week.
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/04/AR2010030402757.html
Posted By:
David C. Seitter
on
Friday, March 05, 2010
Friday, February 19, 2010
Forecasting the Next Decade of Wyandotte County (Panel Discussion)
A panel discussion to hear about the careful planning that put “The Dot” on the development map — and where those efforts might lead in the years ahead is being hosted by the Kansas City Business Journal.
The panelists include:
- Dr. Barbara Atkinson – Executive Vice Chancellor, University of Kansas Medical Center
- Jeff Boerger – President, Kansas Speedway
- Dr. Tom Burke – President, Kansas City Kansas Community College
- Dan Lowe – Managing Partner, RED Development LLC
- Brent Miles – President, Wyandotte Economic Development Council
Friday, March 5
Jack Reardon Civic Center, Kansas City, Kan.
Registration 7:30 a.m. Breakfast 7:45 a.m. Panel Discussion 8-9 a.m. $30 per person. Table sponsorship - $500 (includes preferred seating for 10, table sign with company name and a new one-year print subscription)
Advanced registration required. The deadline for registration is Friday, Feb. 26.
Register Here
Posted By:
David C. Seitter
on
Friday, February 19, 2010
Friday, February 19, 2010
Appeals Court Upholds E-Verify Requirement in Oklahoma
The U.S. Court of Appeals for the Tenth Circuit Feb. 2 upheld Oklahoma’s ability to require contractors and subcontractors to verify employees through E-Verify, the federal employment verification system, before being allowed to work on state projects. The original lawsuit was filed in 2008 by the Chamber of Commerce with the support of the ABC Oklahoma Chapter and other businesses groups.
http://www.abc.org/Newsroom2/News_Letters/2010_Archive/Issue_7/Appeals_Court_Upholds_E_Verify_Requirement_in_Oklahoma.aspx
Posted By:
David C. Seitter
on
Friday, February 19, 2010
Wednesday, February 17, 2010
Transportation Secretary To Award $50 million to KC Area
U.S. Transportation Secretary Ray LaHood handed the Kansas City area $50 million in federal stimulus money for transportation projects in the urban core as well as the Kansas-side suburbs. “This is a great model. People will be looking at Kansas City as a model,” LaHood said of the area’s regional approach to secure a piece of stimulus money.
http://www.kansascity.com/2010/02/17/1754087/transportation-secretary-to-announce.html
Posted By:
David C. Seitter
on
Wednesday, February 17, 2010
Monday, February 15, 2010
Is This Progress - Or Is This Not Progress? You Be the Judge
An article on the stimulus progress report as seen in the January issue of the Construction Executive magazine recently caught my attention. It mentioned that most Americans are fed up with the state of the economy particularly our job market. No surprise here. If you dare to read or watch the news, our frustration seems to be growing instead of waning and rightfully so. Some Americans feel that the policies put in force to stimulate jobs don't seem to be working. People are skeptical about claims of large term stimulus packages but the American Recovery and Reinvestment Act (ARRA) of 2009 emphasizes that the job losses would be higher if it weren't for these packages. Supposedly, grants made under this act have created jobs. BUT this figure does NOT include the impact of $180 billion of spending to support state government budgets or spending on tax cuts. In early 2009 this package was billed as a public works program which implied that the construction industry would be the major beneficiary. But only 131 to 135 billion of the package focuses on infrastructure spending which means that barely more than 1 in 6 dollars ( the price of a very large latte) will be invested in infrastructure.
Only a small minority of the jobs saved or created to date have been in the construction industry but only $80,000 - 1 in 8 jobs have been created in the construction industry. The largest number of construction jobs were created in the states of Massachusetts, New York, Texas, California, Ohio, Michigan, Illinois, North Carolina, Minnesota and Pennsylvania. One has to wonder why few of these jobs have been created in the Midwest. However, stimulus monies are being obligated and translated into construction put-in-place and associated job creation. contractors have been selected for more than $30 billions of stimulus-related work. Where's the money you say? As of September 1, 2009 roughly 18 billion dollars of ARRA monies had been obligated to highway construction with the states of California, Texas, Florida and Pennsylvania getting the biggest share. Looking ahead, the next several months are shaping up to be a particularly intense period of stimulus package spending particularly on construction related projects. This will help bolster nonresidential construction spending in the months to come. However, through the 3rd quarter of 2009 ARRA construction projects were coming in 16 percent below engineering estimates - a reflection of the competitive landscape in the public sector. It remains to be see if this activity will produce self sustaining recovery in private nonresidential construction arena.
Posted By:
David C. Seitter
on
Monday, February 15, 2010
Monday, February 15, 2010
Is This A Positive or Negative Forecast? You Decide . . .
I recently read the 2010 Construction forecasts for the Kansas City area that is published every year by a local real estate company. They provide 2 scenarios due to market uncertainty: Baseline which is more optimistic and predicts employment will bottom out in the 1st quarter of 2010 but will gradually grow later in the year with more accelerated growth in 2011. The other scenario is a Weaker recovery that predicts employment will continue to fall until the 4th quarter of 2010 with no growth until 2011. Total number of jobs predicted to be lost in Kansas City this year could be 56,000 according to the Baseline scenario but 69,000 according to the Weaker scenario. That's quite a difference and possibly more ominous than expected.
The recent news of more layoffs for Sprint and their current practice of leasing space to 3rd party tenants at its campus is a big reason for concern. If they merge with another wireless company and decide to move out of Johnson County this could take the area years to recover from their move. If you happen to be a tenant in commercial real estate - you're in luck. Opportunities are in your favor especially when you have a lease that is expiring in the next 12 to 24 months. There will be options of recasting existing lease terms to your benefit and/or the possibility of upgrading to a higher class building with little to no additional expense. It's expected that tightened lending requirements should aid the recovery once job growth occurs as lenders may not want to fund projects in areas that have vacancies in excess of 20%. The Kansas City metro area has lost approximately 11,000 manufacturing jobs since the beginning of 2008 and an additional 2500 jobs in construction - Ouch!. MARC's estimates show that employment in the construction industry has bottomed out while the manufacturing sector could shed an additional 4500 jobs under the group's longer recession scenario.
The challenge of obtaining financing over the past year is expected to carry into 2010 and possibly even 2011. Emerging industries in Kansas City that could hopefully spark some activity include animal health and life sciences. The Kansas City Area Development Council (KCADC) has successfully recruited several animal health companies to the region to take advantage of skilled workforce, world-class research facilities and networking ability with similarly focused companies. In an ideal world, the GDP would be growing at a rate of 2 to 3%, so while the economy is still struggling it may be a sign the worst is behind us. The virtual gridlock that is the commercial real estate investment industry is the result of "a perfect storm" of market conditions. The leading factor is the lending environment, which has been reduced to a shell of what it was 2 year ago.
Has this been a bumpy ride? You bet and there may be more to come. Hang in there and we'll get through this together.
Posted By:
David C. Seitter
on
Monday, February 15, 2010
Tuesday, February 09, 2010
Client Alert: Agencies Issue Regulations Under Mental Health Parity And Equity Addiction Act
Over a year after the Mental Health Parity And Equity Addiction Act (“MHPAEA”) was enacted (and after the statutory provisions took effect for most group health plans), the Departments of Labor, Health and Human Services, and Treasury have finally issued interim final regulations implementing the provisions of the MHPAEA. The regulations are welcome guidance for many plan sponsors who have thus far been forced to interpret the statutory requirements on their own.
As explained in our November 2008 article, the MHPAEA expanded the Mental Health Parity Act of 1996 (“MHPA”) provisions for group health plans. The original MHPA required parity in aggregate lifetime and annual dollar limits for mental health benefits and medical/surgical benefits. However, it did not apply to substance use disorder benefits. Nor did it bar other types of limitations on mental health benefits (such as annual limits on the number of outpatient treatments).
The MHPAEA not only broadened the MHPA parity rules as they apply to mental health benefits, but also extended those rules to substance use disorder benefits. The new requirements became effective for plan years beginning after October 3, 2009.
Application of MHPAEA
The MHPAEA applies to (i) group health plans sponsored by private and public sector employers with more than 50 employees, including self-insured as well as fully insured arrangements; and (ii) health insurance issuers who sell coverage to employers with more than 50 employees. The regulations generally take effect for plan years beginning on or after July 1, 2010 (January 1, 2011, for calendar-year plans). Collectively bargained plans are subject to a special delayed effective date. In the meantime, plan sponsors must still make a good faith attempt to comply with the statutory requirements.
New Definitions
The regulations amend the definitions of “medical/surgical benefits” and “mental health benefits,” and add a definition of “substance use disorder benefits.” Medical/surgical benefits are benefits for medical or surgical services, as defined under the terms of the plan or health insurance coverage, but do not include mental health or substance use disorder benefits. Mental health benefits and substance use disorder benefits are benefits with respect to services for mental health conditions and substance use disorders, as defined under the terms of the plan and in accordance with applicable federal and state law.
The regulations also provide that plan terms defining whether the benefits are mental health or substance use disorder benefits must be consistent with generally recognized independent standards of current medical practice. This requirement is intended to prevent plans from intentionally mischaracterizing a benefit in order to avoid complying with the MHPAEA requirements.
Financial Requirements and Treatment Limitations
The MHPAEA requires that mental health and substance abuse benefits be no more restrictive than the predominant financial requirement or treatment limitation applied to substantially all medical/surgical benefits (the italicized terms are defined below). The regulations clarify that this analysis must be applied separately for each of the following six categories:
- inpatient in-network,
- inpatient out-of-network,
- outpatient in-network,
- outpatient out-of-network,
- emergency care, and
- prescription drugs.
The regulations also state that medical management standards and other nonquantitative treatment limitations (e.g., formulary design, step therapy, etc.) must apply to mental health or substance use disorder benefits in a way that is comparable to and no more stringent than the way they apply to medical/surgical benefits — unless recognized clinically appropriate standards of care would permit such a difference. For example, plans cannot require participants to exhaust employee assistance plan counseling benefits before being eligible for mental health or substance use disorder benefits if there is no comparable exhaustion requirement for medical/surgical benefits.
Under the regulations, the predominant financial requirement or treatment limitation is one that applies to more than one-half of medical/surgical benefits that are subject to financial requirements or quantitative treatment limitations in that classification. A financial requirement or treatment limitation applies to substantially all medical/surgical benefits in a classification if it applies to at least two-thirds of all medical/surgical benefits in the classification, based on the dollar amount of benefits expected to be paid for the plan year. Any reasonable method may be used to determine the dollar amount expected to be paid under the plan.
Specifically, a plan may not apply cumulative financial requirements or cumulative quantitative treatment limitations to mental health or substance use disorder benefits that accumulate separately from cumulative financial requirements or quantitative treatment limitations established for medical/surgical benefits. So, for example, a plan must not only provide the same deductible; it must be a combined deductible.
Even before the regulations were issued, most plan sponsors understood that the MHPAEA did not require plans to provide any mental health or substance use disorder benefits. Thus, some plan sponsors were considering whether to eliminate mental health and/or substance use disorder benefits rather than comply with the MHPAEA. However, it was not clear whether a plan sponsor could choose to provide one type of benefit (e.g., mental health benefits), yet exclude another (e.g., substance use disorder benefits). The regulations now clarify that providing benefits for one or more mental health conditions or substance use disorders does not require benefits to be provided for any other condition or disorder.
Cost Exemption
One question that remains unanswered by the regulations is how to interpret the MHPAEA cost exemption. Under the statute, group health plans that can demonstrate a cost increase of at least one percent (two percent for the first year this new rule applies to the plan) may apply for an exemption from the law’s requirements. If granted, the exemption applies prospectively, for one year at a time. According to the regulations, guidance on the cost exemption will be issued “in the near future.”
One thing seems clear, however. The best a plan can hope for is to obtain the exemption every other year. This is because the plan will need data from alternate years to qualify for the exemption during each of the following years.
Disclosure Requirements
The MHPAEA includes two new disclosure provisions for group health plans. First, the criteria for medical necessity determinations with respect to mental health or substance use disorder benefits must be made available to any current or potential participant, beneficiary, or contracting provider upon request. Second, the reason for any claim denial must be made available, upon request, to the participant or beneficiary. The regulations clarify that, in order for plans subject to ERISA to satisfy this requirement, disclosures must comply with the ERISA claims and appeals procedure regulations. This means that such disclosures must be provided automatically and free of charge.
Next Steps
In light of the regulations, plan sponsors should promptly review their plan documents and plan design to ensure that their plans comply with all aspects of the new rules.
Posted By:
David C. Seitter
on
Tuesday, February 09, 2010
Friday, January 29, 2010
Prevailing Wages Always Do Prevail
Heads up Folks:
Workers on a public-works project sued to recover unpaid prevailing wages from the bonding company that had issued two bonds on the project. The trial court dismissed the workers’ claims. Here's what happened and why it ended this way: A general contractor in the building construction industry contracted with a school district to complete work on a vocational tech school renovations and additions project. The contractor purchased two bonds from to insure their work before starting the project. The general contractor hired an electrical contractor and considered his own workers to be employees of the electrical contractor. The electrical contractor paid the workers but didn't pay them the prevailing wages for their work. Remember that a prevailing wage is the median wage paid to workers in a specified locality and that the statute requires contractors to pay prevailing wage on public works projects and states that all bonds will cover prevailing wage guarantee.
Any surety bond company on public works contracts owes prevailing wage, even if the bond does not say so. The workers filed claims on the bonds in order to recover these prevailing wages but their claim was denied, so they filed suit against the bonding company. The bonding company argued the workers were too late to file suit and that the bond didn't cover this claim so they filed a motion to dismiss. The court agreed and dismissed the workers’ claims.
Moral of the story: You snooze, you lose. Pay heed to the time limit allowed for these types of suits and you'll come out ahead.
Posted By:
David C. Seitter
on
Friday, January 29, 2010
Monday, January 25, 2010
2009 Employment Law Update: Missouri
The year 2009 was certainly a busy one in Washington.1The Americans With Disabilities Amendment Act, the Lilly Ledbetter Fair Pay Act, E-Verify, and the amendments to the Family Medical Leave Act are just a few of the more significant laws that came to life this past year.
However, even in the face of these significant legislative developments, your Missouri Courts may have made the biggest decade-ending splash. In a major departure from federal law, the Missouri Supreme Court held that supervisors may be held personally liable for violations of the Missouri Human Rights Act. The Missouri Courts of Appeals got into the act as well, issuing one opinion that unquestionably narrows the circumstances under which non-compete agreements will be upheld, and a second opinion that may very well have significantly expanded an employer’s obligation to conduct thorough background checks on newly hired employees. Never an agency to be relegated to a footnote, the Missouri Department of Labor and Industrial Relations also rattled one of its more effective sabers in 2009 — finding more than 126 prevailing wage violations, and assessing more than 1.1 million dollars in back wages against — sometimes unwitting — employers.
SUPERVISORS FACE INDIVIDUAL LIABILITY UNDER MHRA
Hill v. Ford Motor Co., 277 S.W.3d 659 (2009)
Supervisors are not subject to personal liability under federal anti-discrimination statutes. For years, that principle applied in the context of lawsuits arising under the MHRA, as well. However, in Daugherty v. City of Maryland Heights, 231 S.W.3d 814, 816 (Mo. banc 2007), the Supreme Court of Missouri explained that based on the textual differences between Missouri's anti-discrimination statute and its federal counterpart, Missouri courts were not to apply federal principles where they conflicted with the Missouri statute.2 In Hill, the Court lived up to its earlier command, and held that supervisors can be held personally liable in their individual capacities for actions that violate the Act. The Court observed: “The statute is clear that the MHRA is intended to reach not just the corporate or public employer but any person acting directly in the interest of the employer.” Hill, at 669. A supervisory employee clearly falls into that category. Id.
The Hill decision is likely to result in more discrimination lawsuits being litigated under the MHRA in Missouri state court, because supervisors are generally Missouri citizens whereas many corporate entities are not. This has the legal effect of precluding removal to federal court in most instances. Generally, employers prefer federal court over state court because damages are more restricted and summary judgment is more easily obtainable in the federal forum.
ENFORCEMENT OF NON-COMPETE AGREEMENTS MORE DIFFICULT IN MISSOURIBrown v. Rollet Bros. Trucking Co., 291 S.W.3d 766 (Mo. Ct. App.).
Generally, to be enforceable, a covenant not to compete and non-solicitation agreement must be reasonable in scope in terms of geography and duration. In Brown, the Missouri Court of Appeals weakened the theretofore direct relationship between the scope and terms of an agreement and the agreement’s enforceability. Specifically, the Court held that a commodities transportation brokerage firm’s customer list was not a trade secret because the firm’s list could otherwise be compiled from generally available sources. Moreover, the Court held that a dispatcher who worked for the brokerage firm and who used the firm’s customer list to maintain daily contact with between 50 and 100 customers did not have a sufficient “opportunity to influence[] customers” to justify application of a covenant not to compete against him.
After Brown, Missouri courts will likely more closely scrutinize customer lists by analyzing them in the context of the particular employee who has been accused of misappropriating the list to determine whether the list qualifies as a trade secret. Thus, employers that permit low-level employees, who do not have a track record of transferring clients from company to company, to access customer lists may have a much more difficult time enforcing covenants not to compete and non-solicitation agreements against those employees.
ARE YOUR BACKGROUND CHECKS REASONABLY THOROUGH?Herndon v. City of Manchester, 284 S.W.3d 682 (Mo. Ct. App. 2009).
So your background check procedure usually results in an applicant’s former employer providing general information such as the applicant’s title and dates of employment — that’s good enough, right? Maybe not. In Herndon v. City of Manchester, Herndon, a female police officer, sued the City of Manchester alleging that she was sexually harassed by one of her male supervisors, Willie Epps. The City moved for summary judgment arguing that it had taken reasonable steps to prevent harassment (by implementing policies prohibiting harassment and mechanisms for reporting alleged violations of those policies), and had promptly corrected the harassment by discharging Epps once it became aware of his actions. Nevertheless, because Herndon produced evidence showing that Epps had been discharged by a former employer more than fifteen years prior based on a citizen complaint of sexual harassment, the question of whether the City took reasonable steps to prevent harassment at the hands of Epps, the Court of Appeals held, was one for the jury.
After Herndon, Missouri employers should be much more proactive when incomplete or unsatisfactory background reports are received from an applicant’s former employer. This is especially true where, as in Herndon, there is any information suggesting that the employee may have left his or her former employer involuntarily following misconduct that might form the basis for a lawsuit if history repeats itself.
MORE GOVERNMENT CONTRACTS LEADS TO INCREASED PREVAILING WAGE ENFORCEMENT
The Missouri Department of Labor and Industrial Relations (DOLIR) is responsible for enforcing Missouri's prevailing wage laws. Missouri prevailing wage law mirrors, although not precisely, the Davis Bacon Act, and requires contractors and subcontractors who are awarded state-funded contracts to pay prevailing wage rates that are typically significantly higher than those paid to employees working on private contracts. As the private construction industry continues to sag under the weight of a faltering economy, more and more contractors are expanding their operations into state-funded projects that have historically been dominated by heavily unionized contractors.
Underpaying employees, misclassifying employees, or simply failing to generate the appropriate documentation describing employees’ daily activities can result in contractors being required to pay significant sums to employees as back-pay. Over the course of 2009, the DOLIR assessed more than 1.1 million dollars in back wages — and enforcement efforts show no signs of slowing. Importantly, contractors are not only required to meet prevailing wage requirements as to their own employees, they are also required to police their subcontractors to ensure compliance.
Contractors that are looking to transition into the realm of government contracting, but are unfamiliar with the myriad of unique government contracting requirements, should seek legal counsel to ensure compliance within their own organizations, and to develop a system passing prevailing wage and other government requirements to their subcontractors. Even unintentional or unwitting violations of government contracting requirements can quickly turn an otherwise lucrative business opportunity into a losing proposition.
1 For an overview of a few of the more significant changes to federal employment law in 2009, see SIGNIFICANT EMPLOYMENT LAW CHANGES IN 2009, Mark McQueen, January 12, 2010, available at: http://www.spencerfane.com/Publication/Publication.asp?Key=614&~= . For a more complete discussion of changes to the Americans With Disabilities Act, see PUTTING THE ADA BACK ON TRACK, David Wing, November 1, 2008, available at: http://www.spencerfane.com/Publication/Publication.asp?Key=521&~= .
2Daugherty v. City of Maryland Heights, 231 S.W.3d 814, 816 (Mo. banc 2007) (holding that, under the MHRA, a protected category need only be a "contributing factor" in an adverse employment decision to support liability).
Posted By:
David C. Seitter
on
Monday, January 25, 2010