Welcome to the first issue of The Wright Toolbox! You can find out more about this bimonthly newsletter on The Wright Toolbox page.
In this issue:
Contractors and subcontractors often work on thin margins, to say the least. As many experienced in the construction industry know, less solvent companies often “rob Peter to pay Paul” to keep their various projects afloat simultaneously. For certain construction projects, the Maryland Construction Trust statute provides a tool to hold contractors’ owners or officers personally liable for non-payment when that contractor has received payment for the work, but has refused to pay subcontractors or suppliers.
The Court of Special Appeals recently examined what types of construction projects the Construction Trust statute was applicable to in the case of C&B Construction, Inc. v. Dashiell. In this case, C&B Construction contracted with Temco Builders, Inc. to provide Temco with drywall, ductwork, and related services for various Maryland construction projects. Temco received payment for C&B’s work, but failed to pay C&B, and C&B sued Temco for breach of contract and its officers under the Construction Trust statute. The trial court entered judgment against Temco, but not its officers, holding that the Construction Trust statute did not apply to the project in question.
The Court of Special Appeals agreed, finding that the projects at issue were neither subject to the Little Miller Act nor lienable and, therefore, the Construction Trust statute was inapplicable. Thus, to impose personal liability on a general contractor’s owners, managers, or officers, the project must either be public construction (and subject to the Little Miller Act), new commercial construction, or commercial construction renovations that improve the project by at least 15% of its value (and thus subject to a mechanic’s lien). If not, an unpaid subcontractor’s most likely collection option is from the pockets of the general contractor. Hopefully, that general contractor has enough in those pockets to pay both Peter and Paul.
Maryland Adopts New Sexual Harassment Law
At the end of the 2018 Legislative Session, Governor Hogan signed the “Disclosing Sexual Harassment In The Workplace Act of 2018.” The Act will take effect on October 1, 2018 and contains two main sections, one restricting all employers’ attempts to limit an employee’s remedies for sexual harassment and related retaliation and the other requiring employers of 50 or more employees to submit reports regarding settlements of sexual harassment claims.
Section 1 voids any contract or policy provision by which an employee purports to prospectively waive any right or remedy for sexual harassment or related retaliation. It also forbids an employer from penalizing an employee who refuses to provide such a waiver and renders an employer liable for any attorney’s fees and costs that an employee incurs in resisting attempts to enforce such a waiver. Importantly, section 1 effectively outlaws any agreement requiring an employee to arbitrate (rather than litigate in court) any future arising claims of sexual harassment or related retaliation.
Section 2, which is drafted somewhat imprecisely, provides that each employer of 50-plus employees must, on or before July 1, 2020, and again on or before July 1, 2022, submit to the Maryland Commission on Civil Rights (“MCCR”) a “survey” which reports: (i) the number of sexual-harassment related settlements into which it has entered, (ii) the number of times, during the previous 10 years, that it has paid a settlement to resolve a sexual harassment claim lodged “against the same employee,” and (iii) the number of times that it has settled a sexual-harassment claim through an agreement containing a mutual confidentiality provision. Section 2 also requires that MCCR include in the survey a space for an employer to report whether it a “took personnel action against an employee who was the subject of a settlement included in the survey.” It further obligates MCCR to retain for public inspection the number of settlements which a specific employer has reported in the survey.
Employers should act promptly to bring their employment policies into compliance with section 1 of the Act. They likewise need to begin collecting and retaining the data necessary to fulfill the Act’s reporting requirements.
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