In the latest Weekly Wright Report:
The Looming Eradication of Pay-If-Paid and Pay-When-Paid Clauses in Construction Contracts in Virginia
by Richard T. Pledger, Esquire
Historically, Virginia has permitted the enforcement of pay-if-paid and pay-when-paid clauses in construction contracts if such clauses clearly and unambiguously establish the parties’ intent as to the time of payment in the contract. In the absence of a clear and unambiguous statement, a party relying on a pay-if-paid clause can do so only if it can establish by parol evidence that the parties mutually intended the contract to create such a defense. And in the case of a pay-when-paid clause, or even in the absence of a clear and unambiguous intent as to the time of payment in a pay-if-paid clause, a party may only be entitled to a reasonable delay in making payment and is not permitted to indefinitely withhold the payment.
However, based upon recent legislative efforts by the Virginia General Assembly, that jurisprudence is about to change. Since January 12, 2022, both the House of Delegates and the Senate considered and passed Senate Bill 550 which sought to prohibit the use of pay-if-paid clauses in connection with public projects in the Commonwealth of Virginia. The bill, SB 550, found its way to Governor Youngkin who, on March 22, 2022, added additional proposed revisions to the bill which were received by the Senate on April 11, 2022. The Governor’s revisions included (1) an expansion of the deadline for payments by owners on private, as well as public, projects, (2) an enhanced the right to withhold retainage by imposing certain notice requirements, (3) a provision applying the legislation to new contracts after January 2023, and (4) a provision delaying implementation of the law until January 2023. The bill, as modified by the Governor, is under review and is to be presented to the General Assembly on or before December 1, 2022.
By way of summary, HB 550, as amended by Governor Youngkin:
“[r]equires construction contracts awarded by state or local government agencies as well as certain private construction contracts in which there is at least one general contractor and one subcontractor to include a payment clause that obligates the contractors to be individually liable for the entire amount owed to any subcontractor with which it contracts. The bill provides that a contractor shall not be liable for amounts otherwise reducible due to the subcontractor’s noncompliance with the terms of the contract; however, the contractor must notify the subcontractor in writing of the contractor’s intent to withhold all or a part of the subcontractor’s payment with the reason for such nonpayment. Payment by the party contracting with the contractor shall not be a condition precedent to payment to any lower-tier subcontractor. The bill also requires a payment clause to be included in any construction contract between an owner and a general contractor that requires (i) the owner to pay the general contractor within 45 days of receipt of an invoice following satisfactory completion of the contracted-for work, and (ii) a higher-tier contractor to pay a lower-tier subcontractor within the earlier of 45 days of satisfactory completion of the work for which the subcontractor has invoiced or seven days after receipt of amounts paid by the owner to the general contractor for work performed. [Source]
If and to the extent SB 550 is approved and becomes law, Virginia will be joining a minority of states which have, through legislative action, invalidated pay-if-paid provisions and rendered them unenforceable, including California, Delaware, North Carolina, and those few states in which the judiciary has invalidated such provisions on public policy grounds. There are, however, courts in a vast majority of states, including but not limited to, West Virginia, the District of Columbia and many more, which have held or suggested that pay-if-paid provisions are enforceable if the clear and unambiguous intent is to transfer the risk of non-payment to lower-tier contractors. There are some states, such as Illinois, Indiana, Kansas, Maryland and New York which have limited enforceability of such clauses by excepting projects and claims which involve mechanics’ liens and/or surety bond claims.
Therefore, it is important that all parties to a construction contract keep an eye out for developments related to this important legislative effort over the next seven or eight months, be sure to closely review and, if necessary, revise the payment terms of contracts and subcontracts, be aware of the positions that may be raised in the defense of any claims, be cognizant of the contract’s applicable law provisions to determine whether the law of Virginia or some other state applies, and consult with a qualified attorney when reviewing construction contracts.
If you have questions, please email me at email@example.com.
Expedites, Premium Processing and Automatic Extensions of EADs
Employers, foreign nationals and their lawyers started the week in jubilation at the announcement of USCIS on March 29, 2022 that USCIS was going to vastly reduce backlogs; expand premium processing and timely process EAD work permits. We left the week with a thirst for the details on when and what applications were going to be included in the premium processing and expedited EADs. We applaud Ur Jaddou, the Director of USCIS, for the stated aspiration and her sincere desire to ensure that employers don’t lose valuable employees, that employees don’t have to go home and deprive America of their talents, and that a measure of certainty be inserted into the processing times.
As lawyers, our lives have been overwhelmed with devising winning strategies for obtaining expedited handling of either initial or renewal work permits. The USCIS missive promises some immediate action and some aspirational actions, and we support them in doing what it takes to confer immigration benefits on those who deserve them. Employers and clients may soon see the end of sitting on pins and needles wondering when a critical work permit or green card will be received.
The USCIS Action Plan consists of three parts, which are summarized below.
Backlog Reduction Goals
USCIS hopes to achieve these laudable goals by the end of Fiscal Year 2023 (September 30, 2023). Consistent with the USCIS policy of transparency, USCIS announced a metric labeled “cycle times”, not to be confused with processing times, which are USCIS internal processing time goals.
By way of explanation, the goal is to process I-129 petitions (H, L, O, P) within two months; and to process EADs, and I-539 applications within three months; to process I-485 green card applications; I-140 Non-Premium and I-130 relative petitions within six months. If this aspiration approaches reality, the immigration landscape will change to one of predictability of processing times, thus, enabling all parties to enjoy a level of certainty that an eligible benefit will be timely conferred. For those who have been in the immigration world for two or three Presidential administrations, the horizon looks brighter than in the past. This goal has not yet been reached.
There is current a backlog of 182,450 employment-based I-485 green card applications; approximately 740,569 EAD work permit applications and 487,027 citizenship applications.
Expansion of Premium Processing
While the entire immigration community, including employers, employees, and asylum applicants are suffering crisis level delays, the announced addition of several types of applications eligible for Premium Processing (PP) is a glimmer of hope. If an application or petition is eligible for premium processing, USCIS promises an adjudication within 15 calendars for a fee of $2500.00 or it will return the fee. In practice employers feel compelled to opt in to have a modicum of certainty as to when an employee can begin work.
USCIS published a final rule on March 29, 2022 expanding the PP service include applications so vital to our clients. Currently, PP is only available for employment-based petitions for H-1B, L-1, O-1 or TN classifications and some I-140 employment-based petitions, such as those based on PERM labor certifications and EB1 “extraordinary ability” self-petitions.
The nightmare of the EAD delays has permeated throughout businesses, families and foreign national workers. USCIS has not yet announced the rollout dates when premium processing will begin on EADs and the types of EADs which will be eligible for premium processing. However, it is expected that the following timelines will become effective:
- Prior to October 1, 2022, premium processing is expected to be available for I-140 petitions in the EB-1C (multinational managers and executives); EB-2 National Interest Petitions; I-539 applications for those requesting a change of status to F-1 students, F-2 spouses and children of students, J-1 exchange visitors, J-2 spouses and children of J-1s, M-1 students, M-2 spouses and children of students; I-765 applications for work permits for students applying for Optional Practical Training and J-2 spouse work permits. USCIS has advised the earliest time that these categories will be eligible for Premium Processing will be May 31, 2022.
- The bad news is that premium processing for I-539 applications for change of status to or extensions of status for E-1, E-2, E-3, H-4, L-2, O-3, P-4 or R-2 nonimmigrants and most I-765 applications will likely not be eligible for premium processing until fiscal year 2025 (October 1, 2024).
The phase in approach will provide no relief in the short term for H-4 spouses, whose work permits are now taking up to one year, resulting in catastrophic job loss and financial harm to our economy. Recently, USCIS granted automatic work authorization to spouse of E-1, E-2 and L-2 visas, lightening the burden on those workers.
USCIS To Expand Automatic Extensions of EAD renewals
USCIS is expected to publish temporary final rules which would temporarily automatically extend work authorization while EAD renewal applications are pending. Currently, applicants for renewal of EADs in many categories are granted automatic extensions of EAD work permits for 180 days. This rule may grant automatic extension of between 240 up to 540 days. This measure is expected to vastly reduce the number of employees whose employment is disrupted due to work authorization lapses. USCIS expects the number of expedite requests being filed would be reduced. The specifics of the rule are not yet available and this site will be updated when the rule is published.
H-1B 2023 Lottery Results for H-1B Quota
The USCIS has advised the final results of the Fiscal Year 2023 H-1B lottery winners. USCIS has an annual quota of 85,000 H-1B visas available for employers who are subject to the annual cap. During the initial registration period for FY 2023, USCIS received 483,927 H-1B registrations and selected 127,600 registrations for the 85,000 numbers. Of the 85,000 H-1B numbers, 20,000 are set aside for those with U.S. masters degrees and higher. It is possible there will be additional H-1B registration periods if sufficient H-1B petition filings are not received by June 30, 2022. After being notified of selection, the H-1B employer must file the H-1B petition by the published deadline. For the current process, H-1B petitions must be filed between April 01, 2022 and June 30, 2022.
USCIS has several rules which must be followed in order to successfully obtain an H-1B lottery number and, if selected, obtain the approval of H-1B status. These are:
- A prospective employer may only have one registration submitted per foreign national per fiscal year. If more than one is submitted, an H-1B number will not be granted.
- A foreign national may have multiple prospective employers submit aH-1B registrations.
- The H-1B petition may not have a start date earlier than October 1st if the H-1B registration is selected in the first registration period. The H-1B petition will be denied if an earlier date is indicated.
Many prospective H-1B employers are exempt from the cap and are unaware a cap exemption may be claimed. Please contact us at firstname.lastname@example.org to discuss whether a cap exemption is possible.
USCIS Implements TPS and Work Authorizations for Ukrainians and Sudanese Nationals
Registration for citizens of the Ukraine and of the Sudan begins April 19, 2022. The registration period is from April 19, 2022 until October 19, 2023. Applicants must file Form I-821 and an I-765 application for employment authorization, with supporting documents. Both applications should be filed online.
To qualify, citizens of the Ukraine must have continuously resided in the United States since April 11, 2022. USCIS has estimated that approximately 59,600 Ukrainians are eligible for TPS and work authorization.
Citizens of the Sudan must have continuously resided in the United States since March 1, 2022. USCIS has estimated that approximately 3,090 people may be eligible under the Sudanese TPS and work authorization. The Sudanese TPS designation is for eighteen months. USCIS has granted automatic extensions to those Sudanese citizens who have already been granted TPS until December 31, 2022 and this group must file a new application under the Sudanese TPS program to continue protections.
Recipients of TPS are also eligible for advance parole travel documents.
All applications can be filed online and should be filed online as receipts are automatically and instantly generated.
There is concern that with the backlog of EAD applications at USCIS, the employment authorization document may be issued long after filing.
For more information go to: the USCIS.gov newsroom.
DHS Grants TPS to Citizens of Cameroon
On April 15, 2022, DHS designated citizens of the Cameroon for Temporary Protected Status. In order to be eligible, citizens of the Cameroon must have continuously resided in the United States since April 14, 2022. The designation is valid for 18 months and applications for both TPS and work authorization may be filed together online. More information can be found at here at USCIS.gov.
If you have any questions, our Immigration Group at Wright, Constable & Skeen is available for consultation. For a consultation, please email Corey at email@example.com
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