In the latest issue of The Wright Toolbox:
- General Contractors Beware Of Being Too Demanding – read now
- Employer Notice for Background Credit Checks Changed – read now
- Interviewers And Recruiters Beware – read now
General Contractors Beware Of Being Too Demanding
Most subcontractors can tell horror stories about overbearing general contractors who set unreasonable or unjustified schedule expectations, refuse to recognize delays caused by themselves or other trades for whom they are responsible, and make unreasonable threats and demands. In a recent case, a federal appeals court held that such actions constituted a breach of contract by the general contractor. The case arose out of a pumping station project for the U.S. Army Corps of Engineers (“USACE”). The subcontractor was hired to engineer and install a “mechanically stabilized earth” wall at the Project. There were significant delays right at the start of the Project caused by weather conditions, scheduling conflicts and unforeseen conditions. None of these delays were caused by the subcontractor.
However, as a result of the delays, the subcontractor was not able to start its work despite repeated requests from the subcontractor to be allowed to start. When the subcontractor was permitted to mobilize to the site, necessary predecessor work was not done and there were only a few days left in the original schedule. The general contractor started threatening delay damages and liquidated damages against the subcontractor just two weeks after it started work and was demanding that the subcontractor complete its work within the original schedule. Meanwhile, unknown to the subcontractor, the general contractor was notifying the USACE that completion of the project would not occur until the following year and was seeking an extension.
The delays in starting its work caused the subcontractor to lose its intended supplier and the general contractor and USACE started imposing installation tolerances that were outside of industry norms. Ultimately, the general contractor terminated the subcontractor after it had installed 27.5 feet of the 40-foot wall. The general contractor completed the wall with another subcontractor. The work that was performed by the completion contractor was not held to the same tolerances that the original subcontractor was forced to comply with.
The general contractor sued the subcontractor for breach of contract and the subcontractor filed a counterclaim alleging wrongful termination. The trial court found in favor of the subcontractor and on appeal the appellate court affirmed. The court concluded that by threatening to assess delay-related damages without any justification the general contractor was in breach of the subcontract and that the termination of the subcontract was wrongful. The court awarded the subcontractor $215,578.24 in damages. The takeaway for subcontractors is that if the general contractor’s actions are too unreasonable such actions may constitute a breach of the contract. The takeaway for general contractors is that if you are too unreasonable you may be found in breach of the contract.
By Don Walsh
A change was made effective this year which may have gone unnoticed by many employers and which effects background/credit checks performed by employers. In 2018, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (“Act”), which requires nationwide consumer reporting agencies to provide a “national security freeze” free of charge to consumers. This freeze restricts prospective lenders from obtaining access to an individual’s background report, which presumably also makes it more difficult to steal an individual’s personal information. The Act also states that whenever the Fair Credit Report Act (FCRA) requires a “consumer” to receive a summary of his/her consumer rights, it must also include notice regarding the availability of a security freeze.
Not only does this implicate lenders and others who make credit decisions, it also impacts employers who choose to do background checks on applicants and employees. FCRA obligations exist whenever a current or prospective employer requests a “consumer report.” Such a report includes credit searches, driving records, and even criminal records. All employers must inform applicants and employees of the intent to request such a report and must obtain express written authorization from the employee or applicant before doing so. If the employer subsequently takes adverse action or refuses to hire the applicant based on information in the report obtained, the employer is also required to provide the individual with a copy of the report as well as a copy of the Summary of Consumer Rights. The employer is then supposed to wait a “reasonable period of time” before acting on the report.
Because of the changes to the FCRA, employers must now use a new form notice, found here, which includes information on the availability of a security freeze.
Numerous states and cities have passed laws prohibiting employers from requesting an applicant’s salary history during the hiring process and this legislation is gaining momentum in other states as well. These measures are intended to eliminate pay disparities based on gender. The laws vary in prohibitions, but basically prevent an employer (directly and indirectly) from inquiring about an applicant’s current or prior earnings or benefits. Some of the laws do permit employers to inquire into an applicant’s salary expectations or requirements, allow a check on past salary after an offer has been made, or permit voluntary disclosures and verifications by prospective employers. Employers should take steps now to review questions in applications and new hire paperwork, train individuals involved in the hiring process to avoid such questions, and develop a list of approved questions to be used during salary negotiations. Employers should also ensure that outside or third party recruiters not seek or share applicants’ current or prior earnings or benefits with the employer.
To browse past issues, visit The Wright Toolbox page.