Congress Introduces Legislation Requiring OSHA to Establish a Heat Stress Standard
In our March e-blast, we reported on the Occupational Safety and Health Review Commission in the A.H. Strurgill Roofing case, in which OSHA cited the A.H. Sturgill under the general duty clause of the Occupational Safety & Health Act, after a 60-year old temporary employee with various preexisting medical conditions, collapsed on his first day on the job. The citation was vacated because OSHA failed to carry its burden of proving the existence of a hazard and a feasible means of abatement.
Because there is no specific OSHA standard governing heat-related hazards, OSHA relies upon the general duty clause of the OSH Act when citing contractors for heat-related hazards. Congress is hoping to change this. On July 10, the U.S. House Education and Labor Committee released a bill that, if passed, would require OSHA to develop a federal standard on workplace heat stress. The Asuncion Valdivia Heat Illness and Fatality Prevention Act, spearheaded by Representatives Judy Chu (D-CA) and Raul Grijalva (D-AZ), directs the Occupational Health and Safety Administration (OSHA) to establish the first-ever federal safeguard specific to the health risks of heat. The bill is named for Asunción Valdivia, a farmworker who died after picking grapes for a 10-hour shift in 105-degree heat. OSHA has two years to establish its proposal under the bill in its current form. If the proposed rule is not promulgated within two years, the bill requires OSHA to issue an interim rule. Requirements for the interim rule include establishing exposure limits that would trigger protective actions to be taken by employers.
We will continue to keep you informed on this issue. In the meantime, be sure to provide training to temporary and permanent employees on heat-related hazards and to develop and implement a heat-hazard prevention and safety plan. The heat-hazard training and plan to abate an excessive heat hazard should include (1) loosely worn reflective clothing; (2) a work/rest regimen; (3) providing water and shade; (4) monitoring employees; and (5) an acclimatization protocol. An acclimatization plan allows employees to gradually increase time spent in hot conditions and build up tolerance to working in the heat.
Legislation Introduced to Raise Minimum Salary Requirement for White Collar Exemptions from Overtime Pay
In our last e-blast, we informed you of the Department of Labor's proposal to set the minimum salary threshold for the white-collar exemption at $35,308.00, up from the current minimum salary threshold of $23,660.00. During the month of June, the Democrats introduced legislation in both the House and the Senate which proposes to raise the minimum salary threshold to $51,064.00. The proposed legislation seeks to incorporate many of the provisions in the Obama-era Labor Department overtime pay rules, including automatically updating the minimum salary threshold every three years.
It is unlikely the legislation will become law, in light of the Republican majority in the Senate. As it concerns the Department of Labor's (DOL) proposal, the attorney generals of 15 states wrote a letter to the DOL dated May 21, 2019, a copy of which can be found by clicking here. The letter urges the DOL to instead issue a final regulation that is consistent with the Obama-era Labor Department overtime proposal, including retaining its salary level and automatic updating of the minimum salary threshold.
One thing is for sure, and that is there will be more to come on this issue. We will certainly keep you informed.
Roofing Contractor Assessed $75,710 in Back Wages
The Department of Labor recently announced that Arry's Roofing Services out of Tarpon Springs, Florida paid $75,710 in back wages owed to 144 employees for violating overtime provisions of the Fair Labor Standards Act. The DOL's press release can be accessed here.
The wage and hour violations made by Arry's in compensating its employees are not unique. Arry's was alleged to have committed two wage and hour mistakes that resulted in the assessment of back wages due. First, Arry's failed to include earned production bonuses when calculating the overtime rate owed its non-exempt employees. Second, Arry's mistakenly believed it was properly classifying certain employees as exempt based on the fact that those employees were paid a salary.
As it concerns production bonuses, the law is clear that non-discretionary bonuses are to be included in determining what constitutes an employee's regular rate for purposes of determining that employee's rate of pay for overtime work. For example, consider an employee who works 40 hours per week and earns $400. That employee's regular rate of pay is therefore $10 per hour. Now, suppose that same employee earns a non-discretionary production bonus of $100 for that workweek. This brings his total compensation for work performed that week to $500, and the regular rate of pay is now $12.50 per hour ($400 for his hourly work performed + $100 non-discretionary bonus divided by 40 hours of work).
Now, assume that same employee works 10 hours of overtime during that week, bringing his total initial or base compensation for that week to $600 ($500 for 50 hours of actual work at the rate of $10 per hour + $100 for the non-discretionary bonus). For purposes of calculating additional overtime pay, the regular rate of pay must first be determined. The regular rate of pay in this example is $12 per hour ($600 base compensation/50 hours worked = $12 per hour). The employee is entitled to one-half of the employee's regular rate for each hour of overtime worked. In this example, the employee is therefore entitled to $6 per hour of overtime worked during the workweek. In this example, the employee is entitled to an additional $60 on top of his base compensation for his overtime work during the workweek (half the regular rate, which is $6, multiplied by the number of overtime hours worked, which in this case is 10 additional hours). The employee's total compensation for this week, in this example, is $660 ($600 base compensation plus $60 of "half-time" as compensation for the overtime hours worked).
The above-described situation provides a scenario in which an employee is given a bonus which covers only one weekly pay period. The situation becomes much cloudier when, as under many bonus programs, the calculation of the amount of the bonus cannot be determined in only one workweek. For example, many roofing contractors award non-discretionary bonuses based on the employee's production during a 3 month or 6 month period. In these cases, the roofing contractor is free to exclude the amount of the bonus when calculating the regular rate of pay, at least until such time as the amount of the bonus or commission is determined. Once the amount of the non-discretionary bonus is determined, the employer must go back and apportion the amount of the bonus to cover the period of time within which the bonus was earned in order to calculate the employee's regular rate for each previous workweek period. For example, if the employee worked hours in excess of 40 during any of the workweeks for which the bonus was earned, the employee is entitled to additional compensation to account for the inclusion of the apportioned amount of the bonus in his regular rate. This is all necessary for purposes of determining the employee's correct overtime pay. In cases where it is very difficult or impossible to ascertain the weeks for which a bonus was earned, the FLSA does allow the employer to adopt any reasonable method to determine overtime pay.
As it concerns classifying salaried employees as exempt, roofing contractors must know that in order to properly classify someone as exempt from overtime pay under either the executive, administrative, or highly compensated exemption, paying a salary does not resolve the issue. In addition to passing the salary basis test to properly classify an employee as exempt from overtime pay under these exemptions, the employee must also pass a job duties test. If an employee paid a salary does not pass a job duties test applicable to one of the exemptions, the employee is owed overtime pay for hours worked in excess of 40 during the workweek.
If you have any questions or concerns regarding yoru payroll practices, please contact Philip Siegel, who can be reached
directly at (404) 469-9197 or e-mail him by clicking
OSHA Announces Changes to Certain Construction Standards
OSHA recently changed several standards relevant to employers in the construction industry. On July 15, 2019, OSHA revised its standards under the Standards Improvement Project, which has been underway for 24 years following a presidential memo from President Clinton. The most recent changes were proposed in 2016. Following a public comment period, OSHA dropped several of the proposals. The proposals dropped included a proposal to call excavated materials or equipment next to a trench a hazard. Another dropped proposal would have required personal protective equipment to fit the size of each employee. The agency also proposed to change the lockout/tagout standard for work around electrical supply, but due to public opposition, the lockout/tagout standard will remain the same.
The standards that did change were aimed at several goals. OSHA wished to simplify some of its regulations, remove some regulations that were not necessary for workplace safety, reduce employer burdens, increase voluntary compliance, and update some outdated standards to reflect modern consensus standards.
OSHA actually deleted over 30 pages of text from its regulations to streamline them and remove standards that it did not believe were applicable to contractors. The thirty pages of text were replaced with a single reference to general industry standard 1910.119.
The new standards went into effect July 15, 2019. They include a new standard in fall protection to lower the lifeline and lanyard breaking strength from 5,400 pounds in some construction standards to 5,000. This brings the standard in the construction industry into line with the requirements of the fall protection standard and the standard for employment outside the construction industry. OSHA stated its intention to increase voluntary compliance by making the standard uniform across industries.
Contractors working on road construction will now have to comply only with the 2009 edition of the Manual on Uniform Traffic Control Devices, which basically means that the federal regulations from the US Department of Transportation now preempt all conflicting state and local laws on the subject. Again, this new standard is aimed at increasing voluntary compliance.
Residential contractors are now exempt from posting maximum safe load limits for floors in single family homes under construction.
Rollover protective structures and overhead protection requirements have been updated to reflect the standards published by ISO (International Organization for Standardization).
Reflecting the trend toward privacy protection in federal law generally, OSHA has now removed the requirement to place social security numbers on most records. The intention is to prevent identity fraud.
The new standards went into effect July 15, 2019 and may be found by clicking here.
Getting Paid - a Quick Refresher on "Pay-if-Paid" vs. "Pay-when-Paid" Clauses
"Pay-if-paid" and "pay-when-paid" clauses are some of the most negotiated, and litigated, clauses in construction subcontracts. Every subcontractor should closely scrutinize these conditional payment provisions during subcontract negotiations and understand the legal ramifications on the right to payment before executing any subcontract. Knowing the right language, and the difference between the two provisions, could mean the difference between getting paid or taking a loss.
"Pay-if-paid" clauses create an express condition precedent to the contractor's obligation to pay the subcontractor - the subcontractor will only get paid if the owner pays the contractor. These clauses are meant to shift the risk of the owner's nonpayment from the contractor to the subcontractor. Here's a sample: "Contractor's receipt of payment from the owner is a condition precedent to contractor's obligation tot make payment to the subcontractor." See
MidAmerica Constr. Mgmt., Inc. v. MasTec N. Am., Inc.
, 436 F.3d 1257, 1261-62 (10th Cir. 2006) (quoting Robert F. Carney, Adam Cizek, Payment Provisions in Construction Contracts and Construction Trust Fund Statutes: A Fifty-State Survey, Constr. Law., Fall 2004, at 5).
Alternatively, "pay-when-paid" clauses, depending on the state and the language of clause, will either be interpreted as a condition precedent to payment (same as a "pay-if-paid" clause) or merely create a timing mechanism for when payment should occur. The majority view is that "pay-when-paid" clauses are timing mechanisms, not condition precedents. Under these clauses, in most cases, the contractor must make payment within a reasonable time, even if the contractor does not get paid by the owner. Here's a sample: "Contractor shall pay subcontractor within seven days of contractor's receipt of payment from the owner." See id.
"Pay-if-paid" and "pay-when-paid" clauses can create significant financial consequences for any subcontractor that assumes the risk of nonpayment. Alternatively, having the right language in any conditional payment provision can bring significant financial benefits to a subcontractor that has successfully shifted the risk of nonpayment on the contractor. It is vital for all subcontractors to understand the legal implications of the conditional payment provisions in their subcontracts, whether it's "pay-if-paid" or "pay-when-paid." The best way for subcontractors to avoid the pitfalls of nonpayment due to a "pay-if-paid" clause is to first recognize the language and then avoid it altogether. There are defenses available to challenge "pay-if-paid" clauses but by simply not agreeing to "pay-if-paid" language in a subcontract, and demanding equitable payment terms, a subcontractor can avoid the risk of nonpayment altogether.
We're here to help. If you have any questions about "pay-if-paid" and "pay-when-paid" clauses, or need help negotiating or challenging language in a specific subcontract, please contact Ben Lowenthal. You can reach Ben at (404) 522-1410 or e-mail him by clicking here.
Employee Spotlight: J.T. Gallagher
With each of our e-blasts going forward, we will be introducing you to a member of the HPSS Team! This month, meet J.T. Gallagher.
What is your role/position at HPSS?
How long have you practiced law?
How does your occupation now line up with what you wanted to be when you were a child?
Growing up, I always enjoyed building and wanted to be in the construction industry. In high school, I worked as a laborer for mechanical contractor and looked up to the people in the white hardhats running the projects. I went on to obtain an undergraduate degree in building construction and was a project manager for a commercial construction company before I went back to law school. I see being a construction attorney as the natural next step in my life-long interest in construction.
Who is your all-time favorite musician/songwriter/entertainer?
Outside of work documents, what's the last thing you read?
Outside of work, I'm mostly reading children's books to my little boys.
Is your favorite leisure time spent indoors or outdoors?
Outdoors. My favorite leisure time activity right now is to playing ball outside with my 2.5 year old son.
Tell me about your family.
I've been married to my wonderful wife Stephanie for coming up on six years. We have two boys, C.J., who is 2.5 and Felix, who is seven months old.
Name the top 2 items on your bucket list.
Visit every major league baseball stadium. Stay in an overwater hut in the Maldives.
What is your proudest moment at HPSS?
I've truly enjoyed the opportunity to develop relationships with our client and am thankful to have been able to achieve results that have kept those clients as satisfied long-term clients.
How do you relieve yourself of the stress?
Play with my boys.
HPSS on the Internet!
Philip Siegel was a recent guest on The Roofer Show podcast hosted by Dave Sullivan. Philip spoke on How to Prevent Employee Poaching by your Competitors. The podcast can be accessed by clicking here.
Philip also gave a webinar presentation to the Building Trades Employers' Association of Boston and Eastern Massachusetts titled High Times - Navigate Medical Marijuana Laws and Post-Accident Drug Testing. You can access the webinar by clicking here.
Back in April, Philip was also a guest speaker at the GAF Wealth Builders Conference, where he spoke on the Top 10 Employment Law Mistakes Made by Roofing Contractors. You can access the beginning of the presentation here (the full presentation will be available shortly).