The Importance of Tracking COIs for Every Contractor - COI Management

When a subcontractor is having trouble completing its subcontract work, it is not uncommon for a contractor to assert itself more directly into the completion process to help expedite the work. What’s the harm you might ask? A recent Loudoun County, Virginia case answered that question: It could lead to tortious interference with contract and conspiracy claims by the subcontractor. That case was Evans Construction Services (the subcontractor) versus Ox Builders (the contractor), and it also included a claim by the subcontractor against the contractor’s site superintendent, Lawler, as a co-defendant in the case individually. Evans alleged that Ox and Lawler tortuously interfered with Evan’s subcontracts by dealing directly with the subcontractors and directing the subcontractors’ work, cutting Evans out of the picture. Evans sought to recover its lost profits. Ox and Lawler argued against liability because Evans’ claims sought redress outside of Evans’ subcontracts with Ox and because Evans had no contract with Lawler at all, moving to dismiss Evans’ lawsuit as a matter of law. The court denied that motion, holding that the facts as pled by Evans were legally sufficient if ultimately proven by Evans, to support a claim for breach of legal duties separate from duties arising contractually only; and specifically for wrongful interference with Evans’ subcontracts and Evans’ related conspiracy claim against the defendants. Although the court acknowledged that Evans’ claims were interrelated with the Ox – Evans subcontracts underlying the parties’ relationship, those common facts could support both contractual and non-contractual breach claims in certain circumstances. The court further determined that such circumstances, if ultimately proven, included Evans’ claims that Ox and Lawler violated their independent common law duties to not interfere with Evans’ lower tier subcontracts and not conspire together to injure Evans in its business. The court, therefore, allowed Evans’ claims to proceed to trial on their merits. The defendants apparently did not argue to dismiss the conspiracy claim on the basis Lawler, as an employee of Ox, could not conspire with Ox, his employer (referred to as the intercorporate immunity doctrine), or at least that defense was not discussed in the court’s decision. But, regardless, this decision reflects the necessity for caution “going around” subcontractors when subcontract disputes arise. Author: Neil S. Lowenstein Source: https://vanblacklaw.com/construction/contractor-takeover-leads-to-tortious-interference-with-contract-and-conspiracy-claims/

In the construction industry, where multiple companies working closely together abound and where it is more difficult to monitor employee behavior because many employees are in the field, more incidents of inappropriate behavior occur. Texas and California, two states opposite politically and in law making, have instituted legislation expanding sex harassment protections for employees in the workplace that go even further than federal protections. Indeed, both laws have similarities. Texas and California Similarities In Texas , as of September 1, 2021, under expanded protections against sexual harassment, individuals in management and companies that have even only one employee can be held liable. In the construction industry, this expansion could sweep many subcontractors and tradesmen under the new law. The new law will challenge the definition of who is a manager. In California, under the 2019 law, an employer may be liable for acts of nonemployees concerning any type of harassment (not just sex harassment) against employees and other nonemployees working as interns or volunteers and service contractors. In Texas, the new law increases the time limit to file a sex harassment charge from 180 days to 300 days, making it consistent with federal law. Similarly, in California, an employee has up to 10 years to file a civil action for sexual assault or attempted sexual assault, or within three years after an employee discovers an injury or illness as a result of the assault or attempted assault, whichever is later. In Texas, instead of requiring supervisors to “take prompt remedial measures,” individual liability will hang on whether supervisors “knew or should have known” about the sex harassment in the workplace. The new law also requires “immediate and appropriate corrective action.” Certainly, the standard of “knew or should have known” will be case-specific and fact-intensive, making it difficult to dismiss cases before they reach trial. In California, recent amendments to the Fair Employment and Housing Act have made it easier for employees to prevail in sex harassment actions. They also lowered the employee’s burden and standard of proof.  Implications What does this mean for employers of all sizes? More frequent training, updating sex harassment policies and employee handbooks, expansion of human resources departments to respond more quickly to complaints, and a closer evaluation of what constitutes a managerial position are required. In California, recent legislation requires training for even the smallest of employers (a minimum of five employees). As of January 2020, California imposed minimum time requirements for the length of such training for supervisors and other employees. To be sure, in the multi-employer setting, companies also may need to verify that other companies they work alongside have sex harassment policies, that they conduct periodic training, and that their employee handbooks have been updated to comply with the law. Author: Victor N. Corpuz Source: https://www.jacksonlewis.com/publication/new-sex-harassment-laws-making-strange-bedfellows-construction-industry