The Construction Advantage
OSHA Citations for General Contractors
Job site safety is always a high priority. Tragically, this year’s construction season in ME has been marked by a spate of recent accidents, which has refocused attention on safety at construction sites.
A recent case from the United States Court of Appeals, Fifth Circuit clarified the extent to which the Secretary of Labor, acting through the Occupational Health and Safety Commission, has the authority to issue citations for safety violations to general contractors at multi-employer construction sites, when the general contractor controls a hazardous condition at that site, even if the condition affects another employer’s employees. Acosta v. Hensel Phelps Construction Company, 909 F.3d 723 (5th Cir. 2018).
For thirty-seven years the Fifth Circuit had maintained that “OSHA regulations protect only an employer’s own employees.” OSHA, however, regularly cites general contractors as “controlling” employers with regard to hazards only faced by subcontractor employees.
In Acosta, an OSHA compliance officer conducted an inspection of a job site and discovered three subcontractor employees working at the base of an unprotected wall of evacuated soil. The general contractor and subcontractor’s superintendents were present at the wall, with full views of the employees working near the wall. OSHA cited both the general contractor and the subcontractor for “exposing employees to a cave-in hazard from an unprotected excavation at a construction site.”
On appeal, the Fifth Circuit was asked whether OSHA had the authority “to issue a citation to a general contractor at a multi-employer construction worksite who controls a hazardous condition at that worksite, even if the condition affects another employer’s employees.” The Fifth Circuit concluded that OSHA does indeed have that authority.
Although a ME court has yet to rule in a similar case, the Fifth Circuit’s reasoning will likely apply to a similar set of facts. General contractors should be aware that they may be liable for safety violations at job sites which only affect a subcontractor’s employees. Stay tuned for more developments on this issue.
Understanding “No Damage For Delay Clauses” in Construction Contracts
There are a variety of ways that owners and general contractors use contract clauses to control the risk of unanticipated cost escalations in construction. Unforeseen delays top the list of risks that many construction players want to eliminate by contract. During the past decade, the insertion of “no damage for delay” (NDD) clauses has become routine. These clauses typically provide that all forms of delay, including delays that would otherwise be excusable, are non-compensable and that the sole remedy for delays experienced by a contractor, and those claiming through it, is an extension of time. This limitation applies even under circumstances where the party attempting to enforce the NDD clause is at fault for the delay.
Although a handful of states have enacted legislation invalidating NDD clauses based on public policy concerns (WA, CA, AZ, MO, LA and NC), most courts addressing the issue directly have ruled that a clear and unambiguous NDD clause is enforceable, absent conduct amounting to fraud or bad faith. However, courts will typically construe an NDD clause strictly against the drafter. As a result, clauses that lack clarity or conflict with other contract provisions concerning compensation for delay may be invalidated. The Supreme Courts of ME, New Hampshire and Vermont have not directly addressed the validity of NDD clauses. Massachusetts, Connecticut and Rhode Island have determined that NDD clauses are enforceable, subject to exceptions similar to those discussed below.
In order to discourage abuse by the party asserting the NDD clause, courts have tried to level the playing field by adopting a number of conduct-based exceptions to enforcement. Most of these exceptions overlay equity principles and rely on the covenant of good faith and fair dealing implied in all contracts. An NDD clause will not generally be enforced where the party asserting it has engaged in 1) active or intentional interference with the progress of the work, 2) willful misconduct, 3) grossly negligent conduct or 4) conduct causing delays so unreasonable as to constitute an abandonment of the contract (a cardinal change). The right to enforce an NDD clause may also be waived when the party asserting it has previously approved payment for delays occurring on the same project.
Whether you are in the position of an owner, contractor or lower tier subcontractor, it is important to understand the impact of NDD clauses and the conditions under which they are enforceable. The rules differ somewhat in each state. If you have questions, contact our Construction Practice Group in ME or New Hampshire for answers.