VB CGC Practice Group

VB CGC Practice Group
Vandeventer Black's Construction and Government Contracts Practice Group focuses on serving our business clients in the construction industry. We currently have offices in Norfolk and Richmond, VA, the OBX and Raleigh, NC, and Hamburg, Germany. For more information about Vandeventer Black, clink on the VB logo.

Tuesday, March 1, 2016

Part 2: Paid Sick Leave Mandate Proposed by DOL for Contractors

As an adjunct to our earlier summary blog on DOL's proposed sick leave mandate for federal contractors, below is the overview of the proposed rule by Vandeventer Black partner and employment law practitioner Anne Bibeau which more fully expands upon the proposed rule and its implications. Please contact Anne for more information at 757.446.8600 or abibeau@vanblacklaw.com, or visit our firm's website at www.vanblacklaw.com.

U.S. Department of Labor Issues Proposed Rule on Mandatory Paid Sick Leave for Federal Contractors
By Anne G. Bibeau, Esq.

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 public is invited to submit comments on the NPRM to DOL by March 28, 2016.

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; 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 stalking 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.

Paid Sick Leave Mandate Proposed by DOL for Contractors

DOL has recently (Feb 24) proposed a rule requiring federal contractors to provide workers with up to seven days of paid sick leave per year. The proposal is for contractors to offer one hour of paid leave for every 30 hours of work. Employees could use the time to care for themselves or family members and for absences resulting from sexual assault, domestic violence or stalking.

The proposed paid leave requirement would apply to new or renewed contracts beginning in 2017. There are some limited exceptions proposed, including for arrangements with Indian tribes and construction contracts under $2,000, and the proposed rule further exempts contractor employees who perform work on a federal contract but also spend at least 80 percent of their weekly hours on other non-contract work.

Also of note, sick leave would carry over from year to year. Service Contract Act and concession contracts are within coverage of the proposed rule, and not just construction contracts.

There is a 30-day public comment period, after which DOL has until Sept 30 to issue a final rule. As of the posting of this blog, the proposed rule is available at the Federal Register website at this link:


Friday, February 12, 2016

Temporary Staffing: Contractor Licensure Depends on Project Location, and the Virginia Requirement Remains Unclear

LEGAL ALERT©: Temporary staffing agencies may require contractor licensure, depending upon project location, and the answer in Virginia remains unclear

This alert summarizes a complex issue that is the subject of a more detailed overview prepared by Gretchen Ostroff, a member of the Vandeventer Black Construction and Government Contracts Practice Group. Gretchen’s detailed overview is available on the firm website.

THE ISSUE:           

Virginia’s contractor licensing requirements do not specifically address licensure of temporary staffing agencies; but several other states with similar licensing requirements have held that temporary staffing agencies must be licensed as contractors if they supply laborers to construction projects. Lack of licensure subjects the temporary staffing agencies, those hiring them, and potentially contractors at higher tiers, to potential criminal violations, as well as administrative penalties such as fines, suspension, or license revocation.  

WHY NOW?        

Responding to the Governor’s earlier Executive Order, the Virginia Department of Labor and Industry (“VDOL”) recently issued a policy memorandum outlining its commitment to prevent “worker misclassification” for “independent contractors”, who VDOL interpreted as actually being “employees”. An inter-agency task force was established in conjunction with that worker misclassification prevention effort, which includes the Virginia Department of Professional and Occupational Regulation (“DPOR”). 

Associated new policy requires a contractor working in a “multi-employer worksite situation” to provide proof of its DPOR contractor’s license and proof of the DPOR license for all subcontractors. The policy also eliminates penalty reductions for small companies and companies acting in good faith. While independent contractors were specifically targeted, temporary laborers were not specifically addressed.

The prevalence of temporary labor in the construction industry is nothing new. Skilled or unskilled, temporary workers perform numerous roles on construction jobsites. Various contractors at all tier levels often wholly or partially outsource project labor, among other things enabling them to reduce overhead while maintaining a ready supply of workers on an as-needed basis. Because most temporary staffing agencies do not consider themselves “contractors”, they typically do not hold contractor licenses through DPOR. 


There are some states that statutorily address temporary labor services for contracting purposes. For example, California law defines “contractor” as including temporary labor services. Typically, though, even if addressed such as in California, licensure is not required for the temporary labor company if the temporary employees work under the supervision of a licensed contractor. 

Two recent state courts, West Virginia and Alabama, have looked at the question where temporary labor services were not statutorily addressed. While using different analyses, both courts held that temporary staffing agencies required contractor licensure.  Of note, the contracting licensure requirements of those states were similar to Virginia’s statutes and regulations.

In the West Virginia case, the court took a broad view of temporary laborers, and concluded that since the temporary workers were engaged in construction work, it did not matter in what particular trade they were performing – licensure was required. The Alabama court took a more narrow view that focused on the particular “construction activity” involved, and indicated that, for example, menial labor might not require temporary agency licensure, but that for typical construction activities, licensure was required.

So where does that leave Virginia? That remains the unanswered question. In contrast to states like California, Virginia’s statutes and regulations are silent regarding temporary staffing and, unlike West Virginia or Alabama, there are no reported cases yet addressing this question. Nor, yet, has either VDOL or DPOR stated their positions. But it should be noted that the stated rationales of the task force for its worker misclassification concerns included similar rationales to those used by both the West Virginia and Alabama courts.

Until Virginia addresses the issue by statute, regulation, or case holding, the outcome in Virginia remains uncertain-- putting both temporary labor agencies and the contractors that use/allow them at risk.


Short of advocating for legislative or regulatory change, the options are limited. One option is for temporary labor agencies to obtain licensure. That is the most certain approach for both the temporary labor agency and any contractor using temporary labor. A second option is to presume licensure is not required until a contrary ruling is made, and hope licensure is deemed not required.

However, that second approach places both the temporary labor agency and the hiring contractor (and higher tier contractors) at significant risk. Even if the temporary labor agency and the contractor determine licensure is not required, DPOR may not agree. That puts them, and potentially contractors at higher tiers, at risk for violating the law; for which the fines and punishments can be severe, in addition to putting them at risk for associated contract breach damages.


This is just one more example of the complexities and risks associated with contracting. For more information about this issue, or any other government or construction contracting matters, Vandeventer Black’s Construction and Government Contracts Group team of attorneys are poised to help navigate those needs. Please visit the firm’s website to learn more about the firm and our professionals at www.vanblacklaw.com.

SUPPLEMENT - February 15, 2016:

As a follow up to this recent blog, we thought it of interest to note that we received comment back from one of our recipients that a VDOL representative had informally expressed the view that the worker misclassification policy was going to be interpreted by VDOL as meaning that the individual works hired from temporary employment agencies did not require licensure.

If that becomes VDOL’s formal policy that helps clarify one aspects of the misclassification and licensure issues we noted. But even if so it still remains currently unclear whether that view, if applied by DDOL, will apply the individual workers only, or also to the temporary employment agencies providing them, and also whether DPOR will take a similar position or positions since agencies unfortunately at times take dissimilar positions on similar issues.

Our team will continue to try and provide update respecting this issue as new information develops.


Wednesday, January 27, 2016

Court Vacates FHWA 90-Percent Threshold and Miscellaneous Products Exemptions Aspects of FHWA Secretary’s 2012 “Buy America” Exceptions Memorandum

LEGAL ALERT: Court Vacates FHWA 90-Percent Threshold and Miscellaneous Products Exemptions Aspects of FHWA Secretary’s 2012 “Buy America” Exceptions Memorandum

By recent order, the United States District Court for the District of Columbia vacated the Federal Highway Administration (FHWA) 2012 Memorandum regarding exceptions to the “Buy America” preferences for use of domestic steel and iron on federally funded highway programs. Among other things, the Memorandum exempted manufactured items that were at least 90 percent steel or iron, and other miscellaneous steel and iron products, from the Buy America requirements.


The Buy America preference requirement is grounded in several evolutions of the Federal Surface Transportation Assistance Act. One aspect of the related acts was the preference for domestic unmanufactured and manufactured products purchased with monies funded in conjunction with those acts. Those preferences included domestic steel and iron products, both manufactured and unmanufactured.


However, the acts allowed the Secretary of the U.S. Department of Transportation to exempt the Buy America preference when the Secretary deemed Buy America compliance would be inconsistent with the public interest. The 2012 Memorandum resulted from the Secretary’s most recent exercise of that exemption authority, and was intended to clarify earlier exception determinations by the Secretary.


Using his exemption authority, in the 2012 Memorandum, the Secretary exempted from Buy America policy application two categories of products: 1) manufactured products made up of less than 90 percent steel or iron; and 2) miscellaneous or “off-the-shelf” steel or iron products. The case before the District Court involved challenge to those policy exemptions.


In short, the court agreed with the challenging plaintiffs and held the 2012 Memorandum violated the Administrative Procedures Act (APA) because: a) the 90 percent threshold had not been subjected to required notice and comment rulemaking processes, and was itself arbitrary and capricious; and b) the miscellaneous products exceptions likewise were not subjected to required notice and comment rulemaking processes under the APA and also for Buy America waivers.


Thus far, the FWHA has not issued any additional clarification regarding Buy America implementation, nor has it initiated any related rulemaking processes. The overall impacts remain to be seen, but pending any overturning of the decision on appeal, or such rulemaking processes, all steel and iron for new federally funded highway projects must be reviewed for compliance with the Buy America requirements, and potential exemptions .


FWHA personnel have suggested that vacating the 2012 Memorandum is likely to significantly impact utility components. However, there will be other impacts as well. For more information about this sea-change for steel and iron used for federally funded highway programs, or other government or construction contracting matters, Vandeventer Black's Construction and Government Contracts Team attorneys are poised to assist. Please visit the firm's website to learn more about the firm and our professionals at www.vanblacklaw.com.

Tuesday, January 26, 2016

Cybersecurity Regulations: Implementation Update Per New DOD Interim Rule

Our October 16, 2015 blog discussed DOD's cybersecurity regulatory changes. This blog updates that information.
After issuing its earlier rule, the DOD has issued a new interim rule delaying most compliance implementation until December 31, 2017. This is apparently in recognition of the difficulties and expense associated with implementation as noted in our earlier blog.
In that same vein, the interim rule amends flowdown requirements to limit subcontractor coverage to those providing "operationally critical support." But, although most compliance implementation is delayed, informing DOD of certain cybersecurity shortcoming at the time of awards remains a current requirement.

Federally-Funded Highway Projects Facing Impacts by Federal 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 not 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.

As 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. Please visit the firm's website to learn more about the firm and our professionals at www.vanblacklaw.com.

Monday, January 11, 2016

"Final DRAFT" of VDOT Road and Bridge Specifications Published for Comment

Vandeventer Black Construction and Government Contracts Group attorneys Pat Genzler and John Lockard have prepared the below summary of the newly published Final DRAFT of VDOT's proposed Road and Bridge Specification changes for review by the industry and the Federal Highway Administration. More information will be available at the Firm's website as well.

Since the Virginia Department of Transportation (VDOT) proposed changes in 2013 to its Road and Bridge Specifications, Vandeventer Black lawyers have been working with industry representatives to try and initiate a more collaborative process about them. Vandeventer Black lawyer Pat Genzler, as General Counsel for the Virginia Transportation Construction Alliance (VTCA), has helped lead those efforts.

VDOT has now published the revised specifications in Final DRAFT form, and they are available as of this posting at the following VDOT website:

VDOT is now opening the complete book to final review from the industry and the Federal Highway Administration. The same webpage includes a form for comments on the Final DRAFT.

Separately, on December 28, 2015 VDOT announced interim revisions to the 2007 Road and Bridge Specifications would be effective with the First January 2016 Advertisement (January 28, 2016). Those revisions are available in full on the VDOT website at http://www.virginiadot.org/business/const/spec-default.asp.

Despite prior industry input, Final DRAFT includes various changes significantly shifting risks from VDOT to contractors, including among those the following Section 100 changes:

-        Increased requirements for pre-bid review of contract documents and site information to identify any “ambiguities, conflicts, errors or omissions” and to provide written notice to VDOT – with the intended purpose of using the lack of written notice to bolster claim waiver arguments by VDOT.

-        Additional requirements for prompt written Notice of changed circumstances and waivers of contractor claims where notice has not been provided.

-        Shortened times for providing Notice of various changed conditions.

-        Additional bidder disqualification requirements.

-        Risk shifting relating to utility relocation.

-        Requirement and allowable compensation changes for additional costs relating to delays and differing site conditions.

-        Storm water permit requirement changes, both within and outside the right of ways.

Other changes are also proposed for Section 100, and other sections as well, and more detailed summary respecting the Final DRAFT’s current proposed changes is available at Vandeventer Black’s Construction and Government Contracts Group website at www.vanblacklaw.com.

The impacts of the final version will also depend upon VDOT application of them as project issues arise. But it remains important that all prospective bidders, subcontractors, and suppliers for VDOT projects review the Final DRAFT for how the revisions may affect future bids and proposals, project contract documents, and project management – and provide comments that, perhaps, VDOT will be willing to incorporate into the final revised version.