Volume: 19, Issue: 11 - 06/15/2021
Public works contracts usually require the contractor and its subcontractors to pay their workers the “prevailing” local wages, as determined by administrative labor officials. The federal Davis-Bacon Act was the prototype and most states followed suit. Elaborate statutory and regulatory enforcement structures stand behind these contract clauses. Two cases in this issue involve the ramifications of wage underpayment.
The third case in this issue involved a contractor’s loss of bonding capacity, which resulted in the default termination of a construction contract. Read more.
A contractor on federally funded construction contracts represented in its bids it would not use subcontractors and would pay its employees Davis-Bacon Act wages. The contractor awarded fixed-price subcontracts and treated subs as employees on certified payroll documents. The conviction of the two principals of the company for federal wire fraud was affirmed.
The Illinois Supreme Court has interpreted the state Prevailing Wage Act to provide underpaid laborers with a remedy against the contractor/employer only if the public works contract stipulated the applicable prevailing wages. The contract failed to do so. The laborers had only a lesser remedy against the public project owner.
A contractor’s inability to obtain bonding for a contract it had signed was caused by the misconduct of former corporate officers. The company was responsible for those acts, the default was not excusable, and the termination for default and the assessment of excess reprocurement costs were justified.
Volume: 19, Issue: 10 - 06/01/2021
Subcontracts usually make it clear that the sub, an independent trade contractor, is responsible for determining the means and methods of achieving the work product defined in the subcontract. This encompasses not just construction techniques but also safety practices. The subcontractor is obligated to comply with certain safety standards, such as OSHA. The manner in which the sub achieves compliance is left to the sub alone. This week's first case involves a suit by a subcontractor against a prime for failure to stop the work. The second case this week involves application of a change order release to a delay claim. Read more.
A prime contractor’s right to schedule and stop work did not make the prime responsible for a subcontractor’s safety practices. The prime had no control over the sub’s means and methods of construction and did not assert actual control over the sub’s employees.
Standard release language in a VA bilateral contract modification precluded any claim associated with the changed work. The VA had not excepted a delay claim from the release because it did not continue to negotiate the claim after execution of the contract modification.
Volume: 19, Issue: 9 - 05/17/2021
Many states require a “certificate of merit” as a threshold to a malpractice suit against a design professional. Intended to weed out frivolous claims, the certificate must be signed by a similarly licensed professional in the same jurisdiction. And, the certificate must attribute specific costs or losses to specific alleged shortcomings of the individual design professional. The first case this week deals with a malpractice suit where two different architects sealed the same set of construction-ready documents.
The second case this week deals with an off-site supplier qualified as a subcontractor for the purpose of filing a mechanic's lien. This week's third case involves a contractor who lost a claim for failure to follow notice provisions in the contract. Read more.
Where two architects sealed the same design documents without allocating responsibility, the architects could not invalidate a certificate of merit in a malpractice action by arguing the certificate failed to attribute specific errors or omissions to a specific architect.
An off-site fabricator qualified as a subcontractor under mechanic’s lien statutes. The fabricator furnished substantial labor in accordance with drawings and specifications unique to the project. No on-site labor was required.