Archive for the ‘Regulations’ Category

Contractors Prepare: 2013 Hurricane Season

On June 6, 2013 Author By Sean Sullivan
From his vantage point high above the earth in...

(Photo credit: Wikipedia)

Last week, the Office of the Attorney General issued a general letter from Attorney General Buddy Caldwell to the public regarding the 2013 hurricane season. Sometimes, for unfortunate reasons, this time of the year and leading into the late fall and early winter can see a spike in the need for contractors and subcontractors. More unfortunate still is that when we see this spike in demand, we sometimes read or hear about the negative, and instances of “contractor fraud.” Since Buddy has taken the time to inform the public about how to handle these situations, I thought it fitting to inform contractors how they can better prepare for the 2013 hurricane season, and avoid problems in their own right.

Keepin’ It Current

Louisiana has pretty strict guidelines for determining who is allowed to bid, contract and work on a project. The foundation of all that governs contractors in this state is the license. Long story short and in general: you need one (there are always exceptions, depending on the work being done). But I’m an attorney, so I can’t keep it that short. Whether you are an out-of-state contractor or an in-state contractor, in order to operate within the law, there are certain qualifications that must be met. One such necessity is being licensed by this state before even bidding on a project. In my experience, this isn’t usually a problem when people come to us here at the Wolfe Law Group. However, knowing that this license expires is just as important as knowing that you are licensed in the first place. As we enter into a potentially busy season, take the time to review your license. Is it a one-, two- or three-year license? When was it issued? Make sure you keep it current. Your license expires on the anniversary of the date on which it was originally issued. You only have 15 days from that expiration to renew your license without paying a penalty, or worse, being treated as a new applicant.

To all you new applicants out there: now is the time to begin the process of acquiring the proper licensing or registration if you have not already done so. As I said before, any hurricane season has the potential for a spike in business. However, acquiring a license isn’t a quick turnaround. Depending on your status, it could take anywhere from 4 to 10 weeks to get your license. During a time when competition could become rather fierce, this is a delay that could potentially kill your ability to turn a profit.

More important, though, is the need to avoid penalties, losses and lawsuits in the future. The last thing you want to do is go through the entire process and expense of completing a project to then have difficulties with the homeowner and you NOT be licensed. For example, if they decide to not pay you but you don’t have your license, you almost definitely do not have any lien rights under the Private Works Act. If they decide to report you and you don’t have a license, you risk exposure to civil and potentially criminal penalties. If they decide to sue you, well, you get the point. As we enter the 2013 hurricane season, the first item on your contractor preparedness checklist should be to make sure everything is current.

Keepin’ It Active

Less “do or die,” but in my opinion important, is maintaining an active status with the Secretary of State. You would be amazed at how many times a simple search on the Secretary of State’s website reveals that a company actively doing business in this state is actually listed as inactive or that its charter has been revoked by the Secretary. Why? Because people get sloppy. It takes almost no time and very little expense to maintain an active, good standing status with the State of Louisiana, yet people so often let this fall by the wayside. While it doesn’t necessarily impact one’s ability to work or provide services in the state, it could have ramifications if you’re sued by a disgruntled homeowner.

Remember, you are running a business. In so doing, there are certain guidelines and requirements that you need to follow depending on the type of business you are operating. Stay on top of it, or better still, have your lawyer stay on top of it for you. Let’s get back to that disgruntled homeowner from above. Say, the project is complete and, for whatever reason, they sue your company. You’re safe, though, personally right? Maybe. Have you been keeping up with those state requirements for your business? Have you been filing all the correct paperwork every year? Have you been maintaining your accounts correctly? Has your business been operating as a true business, or is it just a front for either yourself or another business? If you can’t answer yes to these questions, you have a problem and you might not be protected. An easy way to avoid this is to keep it active. Make sure you are consistently keeping records with the state and you consistently keep good records for your business. Don’t let the “business-y” end of your construction business lag, especially moving into a time when you could potentially become much busier than usual. If this isn’t your thing – hire that attorney to do it for you.

Keepin’ It Honest

The final note is just one of general good business practice. Keep it honest. When you start bidding and contracting, a lot of times you can avoid future headaches by just playing the game fairly. Of course, there will always be those difficult people you will encounter along the way. It’s amazing, though, how far someone can get (and how much trouble they can avoid) by developing an honest and trusting relationship with the people they are working with. Now is as good a time as any to make that a work mantra.

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Posted in:     Construction Contracts, Hurricane, Licensing, Regulations  /  Tags: , , , ,   /   Leave a comment

In The Pipeline – Changes in Louisiana Construction Law

On May 14, 2013 Author By Sean Sullivan
Louisiana State Capitol, Baton Rouge

Louisiana State Capitol, Baton Rouge (Photo credit: Wikipedia)

If there is any one constant in the legal profession, it is that the law is an ever-evolving, dynamic thing. While there are some general principles that tend to not change all that drastically over the years, the devil truly is in the details. Having to keep abreast of these changes is why you’ll hear people refer to the “practice” of law – we attorneys must continue to learn and adapt as we continue through our careers. Here at Wolfe Law Group, we make sure to have our ears to the ground in order to provide the most up-to-date information for our clients and their businesses. This legislative session, there are several proposed changes in Louisiana construction law, all of which may critically impact how contractors do business in this state. This post is the first of two parts discussing those changes.

 Proposed Changes to the Private Works Act

There are currently three bills in various stages of the legislative process that would significantly change how different parties secure their rights to payment. The first, Senate Bill 183, is the furthest along of the three, having successfully passed through the Senate and out of the House Committee on Civil Law and Procedure. It is the only bill this session, and the first bill since 1999, that seeks to amend La. R.S. 9:4802. This statute outlines which parties are entitled to assert claims for payment against an owner and a contractor. Should this bill become law (which is likely given the total lack of opposition in the Senate or in the House Committee), lessors of movables would be required to provide formal notice to contractors and owners within 10 days of their materials being used on a project, as opposed to simple delivery of a lease. This change might sound insignificant, but it is because of that very reason why it is important for us to keep our clients informed. Without paying proper attention to how the law evolves, current or potential clients might lose their ability to secure payment because they were unaware of this formalizing shift in the law.

The other two bills, House Bill 190 and House Bill 362, propose changes to La. R.S. 9:4822. This statute is arguably the most important in the Private Works Act because it outlines and defines the time and notice requirements that must be met in order for parties to secure their right to make a claim to secure payment. House Bill 190 has passed through the House and awaits a vote in the Senate Committee on the Judiciary. This bill proposes the least significant of changes, merely stating clearly that statements of claim and privilege need not have attached copies of unpaid invoices unless the statement specifically states they are attached. House Bill 362, however, would extend the time requirements for parties to file their claims by double. When notices of contract have been properly filed and you are one of the parties entitled to a privilege by La. R.S. 9:4802, you would have sixty (60) days to file your claim after the notice of termination, as opposed to the current thirty (30) day window. If you are a contractor that properly filed your notice of contract (if necessary), you would have one hundred twenty (120) days to file your claim following termination or substantial completion, instead of the current sixty (60) day window. These deadlines are extended throughout the statute: all 30 day limits are changed to 60 days, and all 60 days are changed to 120 days. The success of this bill has yet to be seen: unlike the others, it hasn’t even made it out of committee yet, and the session is fast coming to a close.

An Easing of Home Improvement Contracting Registration

Securing and maintaining the proper licensing and registration is incredibly important in the construction world here in Louisiana. The knowledge and expertise required in performing such work or providing these services is why it is always recommended that people seek out professional assistance, especially for work around the home. Surprisingly, and not necessarily wisely, Senate Bill 81 proposes to modify the status quo in relaxing registration requirement for home improvement contracting. Currently, no person shall undertake or perform or agree to perform home improvement contracting services unless they are registered with the Residential Building Contractors Subcommittee of the State Licensing Board for Contractors as a home improvement contractor. The proposed law (which unanimously passed the Senate and is scheduled for floor debate in the House on May 16th), adds the following exception to La. R.S. 37:2175.2:

No individual shall undertake on his own property self-performed home improvement contracting services having a value in excess of seven thousand five hundred dollars unless registered with and approved by the Residential Building Contractors Subcommittee of the State Licensing Board for Contractors as a home improvement contractor.

Basically, the legislature is trying to make it easier for a homeowner to perform certain work on his or her property without having to go through the necessary registration channels. While this might not be an issue for some, it is worrying that something as particularized as home construction may be continuing down a path of non-regulation. The true extent of this relaxation, of course, will remain to be seen.

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Posted in:     Construction News, Filing Requirements, Law Changes & Updates, Licensing, Louisiana, Mechanics Lien, Payment Requirements, Regulations  /    /   Leave a comment

OSHA Testing Can Reduce Employer Liability, Saves Companies Money

On December 17, 2012 Author By Wolfe Guest

This guest post was contributed by Joseph A. Ginarte. He is a specialist New York accident lawyer and the proprietor of the Ginarte Law firm. He enjoys writing and sharing his insights on various legal blogs.

Every day, more than twelve workers die on the job, which adds up to a total of 4,500 worker fatalities each year. Another 4.1 million workers suffer serious injury or illness related to their jobs, according to a white paper published by Occupational Safety and Health Administration of the United States Department of Labor (OSHA).While it’s not possible to prevent every accident, the need to promote safety in the workplace is obvious. Programs designed to prevent workplace injury and illness are well established in countries like Canada, Australia, Norway, Japan, Korea and all the 27 member states of he European Union.  In addition 15 states in the United States, including California, require such programs.

Yet many business owners resist mandatory workplace inspections and tighter safety regulations imposed by OSHA. Conventional wisdom claims that safety testing and workplace regulations, such as those imposed represent a job-killing financial drain on businesses. However, the results of a study conducted in May 2012 by researchers at the Harvard Business School, the Haas School of Business at the University of California at Berkeley and Boston University soundly refute those assertions. In fact, the study shows that OSHA testing can actually result in significant savings for companies along with reducing company liability.

Reduced Employer Liability

According to the study, workplaces in high hazard industries that had been subject to random OSHA inspections reported a reduction of 9.4 percent in injury claims. This reduction in claims translated to savings of 26 percent in workers’ compensation costs in the four years following the inspections.  These figures were compiled in comparison with a similar number of uninspected companies in the same high hazard industries.

Significant Savings

The average savings to companies that had undergone OSHA inspections was $355,000 US, according to the study. Further, savings were realized in workers’ compensation claims as small as $2,000 US as well as much larger.  The study also found absolutely no evidence that workplace inspections had a negative impact on company profits.

In their original report, the researchers estimated that if the conditions of the study were duplicated across the entire country, the potential savings could total as much as $6 billion US to employers and employees, when compensation for pain and suffering are excluded. However, as a result of more recent research, the study’s researchers revised their estimate of savings upward in June 2012, from $6 billion US to $20 billion US.

Objective Measurements

The study was able to overcome design and bias flaws present in earlier studies by taking advantage of a 1993 California mandate that requires the California division of OSHA to conduct random workplace inspections. The study looked ad companies that were randomly inspected between 1996 and 2006, along with a similar number of companies that were not inspected. The number of injuries recorded from both groups of companies was drawn from worker compensation claims and other independent sources. By contrast, previous studies of this type had not used random data. Instead, all of the workplaces studied had been the site of a workplace accident or complaint. The information was drawn from OSHA logs, which often become more detailed as time passes.

 

For Further Reading

  • Harvard Business School: New Study Shows That Workplace Inspections Save Lives, Don’t Destroy Jobs
    hbs.edu/news/releases/toffelscience051712.html
  • Occupational Safety and Health Administration: Injury and Illness Prevention Programs – White Paper
    osha.gov/dsg/topics/safetyhealth/OSHAwhite-paper-january2012sm.pdf
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Sworn Statement of Amount Due – Louisiana’s Public Lien

On April 17, 2012 Author By Seth Smiley

Here at Wolfe Law Group, I have been blogging a lot lately on liens for both public and private projects (See other posts here). Anytime a property is owned by and arm of the state then you are dealing with a public project. Although, this seems simple, many contractors do not always see the connection. The reason why so many disputes are happening now is because public projects have dominated in the years of the poor economy. Contractors on these projects need to know the rules so that they can get paid. (see La. R.S. §38:2241 et seq.)

Since the state owns the land, there are no security devices, such as a lien that can attach to the land and call for its foreclosure in the event of default or non-payment. Therefore the state has come up with its own security device to give contractors and laborers a way to collect when not receiving payment.  Here we have the Louisiana coined term: Sworn Statement of Amount Due. La. R.S. §38:2242. This document needs to be filed by the subcontractor or laborer within 45 days of when the work was accepted by the government body overseeing the project. Id.

One way for a contractor who has a sub on any tier below it to cancel the Sworn Statement of Amount Due filed, is to “bond off” the lien. La R.S. §38:2242.2. This mechanism allows for the higher tier contractor to provide security or cash at an amount 125% of the total lien. Id. At this juncture the property will be clear but there will be evidence of the bonded off lien still held with the parish mortgage office. This is pretty common practice so that higher tier companies keep the bond free while settling disputes with subs.

If at the end of the 45 day window from the state agency signing off on full completion of the project there are still any claims remaining as unpaid, then the state, claimants, or contractors may file a concursus proceeding to have the funds distributed into the registry of the court so that the parties can fight about who deserves the funds. La R.S. §38:2243. Any party may file this action, and its a very powerful tool. This is why many of the contractors will use the mechanism to “bond off” the claims, so as to prevent this process.

Finally, every parties favorite section is where attorney fees are awarded. In the Public Works Act, by statute attorney fees are permissible. This gives all parties the confidence to fight thinking that they will recover the fees. Unfortunately, recovery of attorney fees is still a difficult chore even when there is a statute. Here, La R.S. §38:2246 allows for attorney fees to any claimant who timely and properly filed its claim and recovers the full amount of the claim asserted. The reason for the emphasis in the proceeding sentence, is due to the difficulty of getting exactly what you swore was due. Claimants should be as accurate as possible when asserting claims, otherwise this statute will not apply.

The above are just a few of the many nuances contained and embedded in the Louisiana Public Works Act. Each step of the process should be carefully traversed so that the contractor does not lose rights to collect if/when the general contractor or public entity runs out of funding.

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Louisiana Contractors & State Licensing – Home Improvement

On March 6, 2012 Author By Seth Smiley

Just the other day here at Wolfe Law Group, I had to do so research for a client on the licensing rules for contractors. I deal with these rules daily but this client’s issue helped to refresh me. This got me thinking that many contractors and hiring parties do not necessarily know the rules that govern contractors of all types. Here in Louisiana, contractor licensing law is governed by the State Licensing Board for Contractors (SLBC). The actual statues are codified in La R.S. 37:2150 et seq.

Today’s post focuses in on a classification called Home Improvement Contracting. Home Improvement Contractors (La R.S. 37:2175.1 et seq) need to have a “certificate” (not a full license) with the SLBC to perform any home improvement contracting services in excess of $7,500 but below $75,000. These contracts need to be in writing and include: 1) full agreement between owner and contractor, 2) full name, address and registration number of the contractor, 3) detailed list of work and materials, 4) total to be paid & how the costs will be paid, and 5) finally signatures of all parties. Finally the owner needs a copy of the contract documents before any work can start. See La R.S. 37:2175.1 for complete list.

This seems like a very commonsensical list, but you will be surprise how many parties get this wrong and/or miss out on critical elements. The contract will not be deemed invalid if an aspect is missing but the rules need to be followed.

Residential contractors need to be registered with the SLBC. The contractor needs to make a written application with the SLBC, under oath. The application needs to include the following information in addition to proof of workers compensation insurance:

(B)(1) The applicant’s name, home address, business address, and social security number.

(2) The names and addresses of any and all owners, partners, or trustees of the applicant including, in case of corporate entities, the names and addresses of any and all officers, directors, and principal shareholders. This Section shall not apply to publicly traded companies.

(3) A statement whether the applicant has ever been previously registered in the state as a home improvement contractor, under what other names he was previously registered, whether there have been previous judgments or arbitration awards against him, and whether his registration has ever been suspended or revoked.

La. R.S. 37:2175.2

The requirements for granting this certification are more relaxed than the normal contractors license but there are grounds for denial and/or revocation.

If contractors are performing projects that fall within the $7,500-$75,000 window on residential improvements and they get caught for not being registered or not having the proper certification there are penalties. Penalties include administrative costs for hearings and a maximum of 25% of the contract price for the violating party. This could essentially mean thousands of dollars in addition to any causes of action that the homeowner may have against the violating contractor.

Finally, and most importantly for contractors, it is easy to get this certification. If a contractor is not properly licensed to be a home improvement contractor, and that contractor is not paid on the home improvement project, that contractor is legally prohibited from filing a lien on the project! (See La R.S. 37:2175.6) This is very important if you are a contractor trying to get paid. The homeowner can rip you off with very little recourse.

Bottom line: if you are a contractor who deals in home improvement, it is easy to get your home improvement license with the state. It will give you protections and keep you legal. Further, if you are a homeowner and know or suspect your contractor is not properly licensed, you have the SLBC to help protect you and penalize the offending contractor. I help contractors get this registration and I’ve also helped homeowners turn in violating contractors.

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