Coronavirus is dominating the news and planning for the effects of COVID-19 is a big deal for construction companies in the Commonwealth. However, these issues, though immediate, are not the only ones that have popped up here at the beginning of 2020. Several bills that I have been monitoring (here and here) have recently passed both the House of Delegates and the Virginia Senate and are on their way to the Governor for signature (a signature that is most likely going to happen in each case).
Among those bills that did not pass are a bill that would have eliminated right to work in Virginia and allowed so called “closed shops” as well as fair share fees legislation that would have required those that were not part of a union to pay certain portions of union expenses.
Those that did pass the House and Senate and are on the way to the Governor’s desk are as follows (links are to text as passed and sent to Governor):
HB833 (identical to SB8)– Requires contractors and subcontractors under any public contract with a state agency, or with a locality that has adopted an ordinance requiring the payment of prevailing wages, for public works to pay wages, salaries, benefits, and other remuneration to any mechanic, laborer, or worker employed, retained, or otherwise hired to perform services in connection with the public contract for public works at the prevailing wage rate. The provisions of the bill would not apply to any contract for public works of $250,000 or less.
UPDATE: Governor’s recommendation to postpone implementation to May 1, 2021 received by House.
SB838– Provides that an employee has a private cause of action against an employer who fails to pay wages to recover the amount of wages due plus interest at eight percent annually from the date the wages were due. If the court finds that the employer knowingly failed to pay wages to an employee, the court shall award the employee (i) reasonable attorney fees and other costs and (ii) an amount equal to triple the amount of wages due. Among other items, the bill further makes general contractors jointly and severally liable for its subcontractors of any tier’s failure to pay wages to employees for any instance where the general contractor knew or should have known that wages were not being paid. In a bit of relief for contractors, this increased liability risk will not apply where the value of the construction project or aggregate of multiple projects under the same construction contract is below $500,000 or the project is the construciton of a single family residence.
UPDATE: No update on LIS website, but Governor’s website states that it has been signed by Mr. Northam.
SB182– Authorizes any public body, including any state or local government, when engaged in procuring products or services or letting contracts for construction, manufacture, maintenance, or operation of public works, to require bidders to enter into or adhere to project labor agreements on the public works projects.
UPDATE: Governor’s recommendation to postpone implementation until May 1, 2021 received by Senate.
HB1300– Provides that an action against the surety on a performance bond shall be brought within five years after the completion of the contract. The bill further provides that the statute of limitations on construction contracts and architectural and engineering contracts is 15 years after completion of the contract. The bill specifies that completion of the contract is the final payment to the contractor pursuant to the terms of the contract, but that if a final certificate of occupancy or written final acceptance of the project is issued prior to final payment, the period to bring an action shall commence no later than 12 months from the date of the certificate of occupancy or written final acceptance of the project. This seeks to address what has become known as the “Hensel Phelps” issue.
UPDATE: This bill has been signed into law by the Governor.
SB208– Specifies that the use of funds paid to a general contractor or subcontractor and used by such contractor or subcontractor before paying all amounts due for labor performed or material furnished gives rise to a civil cause of action for a party who is owed such funds. The bill further specifies that such cause of action does not affect a contractor’s or subcontractor’s right to withhold payment for failure to properly perform labor or furnish materials and that any contractual provision that allows a party to withhold funds due on one contract for alleged claims or damages due on another contract is void as against public policy.
UPDATE: This bill has been signed into law by the Governor.
Each of these bills have passed both houses of the Virginia leglislature and are likely to take effect July 1, 2020. I recommend that you read their text carefully and consult with an experienced Virginia construction attorney to prepare you for navigating the new construction landscape under these soon to be statutes.
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