DOL Proposes New Salary Threshold for “White-Collar” Exemptions

On March 7, 2019, the U.S. Department of Labor (“DOL”) announced a Notice of Proposed Rulemaking that plans to update the salary threshold for the “white-collar” exemptions (e.g., executive, administrative, professional employees) to the overtime compensation laws. If the proposal becomes final, the new salary level will increase from $455 per week (or $23,660 annually) to $679 per week (or $35,308 annually). The increase would reclassify more than a million American workers as non-exempt and make them eligible for overtime.

By way of background, the salary thresholds for the white-collar exemptions have not been updated since 2004. In 2016, the Obama administration proposed an increase that would have more than doubled the salary threshold to $913 per week (i.e., $47,476 annually). However, the 2016 proposed rule was judicially challenged, and a federal district court imposed an injunction to stop its implementation, in part because the proposed rule contained annual automatic increases to the salary threshold. Under the Trump administration, these court proceedings were stayed after the DOL confirmed its intent to revisit the issue through the rulemaking process. Not only does the newly proposed rule offer a more modest increase to the salary threshold, it eliminates the automatic increases and instead plans for periodic increases after public notice-and-comment.

The proposed rule also purports to increase the salary level for the highly compensated employee exemption. Under the new rule, the salary threshold for highly compensated employees would increase from $100,000 to $147,414.

The DOL expects that the proposed rule will take effect in January 2020. In the meantime, employers should take proactive steps to navigate the financial impact of this potential new rule and should work with experienced counsel on evaluating the best strategy for handling employees that would be affected by the modification, including the consideration of pay adjustments, reclassification, or reduction in force.

If you have any questions on this topic or need assistance, please contact our Labor & Employment Law Practice Group. We encourage you to subscribe to our Labor & Employment E-Briefs to get the latest HR news, tips, and updates.

Report on Reporting: OSHA Clarifies Its Position on Retaliation for Workplace Injury and Illness Reporting

The Occupational Safety and Health Administration (“OSHA”) recently published a memorandum that clarifies the agency’s position on whether certain safety incentive programs and drug testing policies violate the prohibition on retaliating against employees for reporting work-related injuries and illnesses.

Back in May 2016, OSHA issued a final rule that, in part, explicitly incorporated in the recordkeeping requirements the existing ban on discharging or discriminating against employees for reporting work-related injuries or illnesses. OSHA noted in the Preamble for the Final Rule that, in some circumstances, post-accident drug and alcohol testing and workplace safety incentive programs could deter employees from reporting work-related injuries and illnesses and would violate the rule’s anti-retaliation provisions. 

In a follow-up memorandum from October 2016, OSHA clarified that these types of policies would not be categorically prohibited and further explained how the new rule applied under each of these types of policies. Specifically, employers could not drug test employees who report work-related injuries or illnesses unless supported by an “objectively reasonable basis.” That is, drug testing could not be used by the employer as a form of discipline against employees who report an injury or illness, but it could be used as an instrument to determine the cause of a workplace incident, injury, or illness in appropriate circumstances. Under this guidance, the rule effective prohibited drug testing policies that contained blanket requirements for post-injury or post-accident drug or alcohol testing.  Similarly, employers could utilize safety incentive programs if employees were not penalized for reporting a work-related injury or illness without regard to the circumstances surrounding the injury or illness. Thus, OSHA took the position that rate-based safety incentive programs where awards were tied to the number of recordable injuries or illnesses were prohibited.

Fortunately, OSHA recently issued another memorandum clarifying the agency’s position on workplace safety incentive programs and post-accident drug testing. OSHA explained that such policies would only violate the anti-retaliation provisions if the employer took action to penalize an employee for reporting a work-related injury or illness rather than for the legitimate purpose of promoting workplace safety and health. According to the memorandum, OSHA acknowledged that “[i]ncentive programs can be an important tool to promote workplace safety and health.” OSHA provided that rate-based safety incentive programs, which focus on reducing the number of reported work-related injuries and illnesses, are permissible if there are sufficient precautions to prevent employees from being discouraged from reporting an injury or illness. However, employers must do more than circulate a statement that encourages employees to report and promises employees will not face retaliation for reporting. OSHA encourages employers to focus on creating a workplace culture that prioritizes safety, not just reporting rates, and recommended implementing the following measures to avoid any unintentional deterrent effect of rate-based incentive programs:

  • An incentive program that rewards employees for identifying unsafe conditions in the workplace;
  • A training program for all employees to reinforce reporting rights and responsibilities and emphasizes the employer’s non-retaliation policy; and
  • A mechanism for accurately evaluating employees’ willingness to report injuries and illnesses.

Incentive programs that solely focus on reported workplace injuries and illnesses may still violate the prohibition on retaliation. To ensure compliance, employers should implement comprehensive, rate-based incentive programs that incorporate OSHA’s suggestions.

With respect to drug testing, OSHA stated that “most instances of workplace drug testing are permissible” and explicitly identified the following as examples of permitted instances of drug and alcohol testing:

  • Random drug testing;
  • Drug testing unrelated to the reporting of a work-related injury or illness;
  • Drug testing under a state workers’ compensation law;
  • Drug testing under other federal law, such as the Department of Transportation regulations; or
  • Post-accident drug testing to determine the cause of a workplace incident so long as all employees whose conduct could have contributed to the incident are tested, not just employees who reported injuries.

Under this guidance, employers no longer need to analyze whether post-accident drug testing is supported by an “objective reasonable basis.”  Blanket post-accident testing is permitted if all employees whose conduct could have contributed to the accident are tested, but the rule still prohibits blanket testing that targets injured employees. Therefore, employers should focus on consistently applying their post-accident drug testing policy across similarly-situated employees to ensure compliance.

Importantly, this guidance supersedes all other OSHA interpretive documents that could be construed as contradicting the memorandum’s position.

If you have any questions on this topic or need assistance, please contact our Labor & Employment Law Practice Group. We encourage you to subscribe to our Labor & Employment E-Briefs to get the latest HR news, tips, and updates.

E-Verify Deadline Set For February 11

U.S. Citizenship and Immigration Services (“USCIS”) has fully resumed operations following the partial government shutdown, and all E-Verify features and services are now available. Now, employers that participate in E-Verify have until Monday, February 11 to create and enter cases into the system for all hires made during the 35-day government shutdown.

Normally, employers enrolled in E-Verify, the government’s electronic employment eligibility verification program, are required to use the system to run checks on new workers within three days of hire, which is defined as the first day of work for pay. During the government shutdown, however, the three-day rule for E-Verify cases was suspended. Similarly, the time period during which employees could resolve Tentative Nonconfirmations (“TNC”) was extended due to the government shutdown. USCIS stated that: “Days the federal government [was] closed will not count towards the eight federal government workdays the employee has to contact the Social Security Administration (SSA) or the Department of Homeland Security (DHS).”  However, employers were still required to satisfy the Form I-9 requirements for every person hired by completing the Form I-9 no later than the third business day after the employee starts work for wages or other remuneration.

Now, employers enrolled in E-Verify need to create and enter cases into the system for all employees hired during the government shutdown for whom a Form I-9 was completed. USCIS has instructed employers to use the hire date from the employee’s Form I-9 when creating the E-Verify case. If the case creation date is more than three days following the workers’ start date, the employer should select “Other” from the drop-down menu asking for an explanation and enter “E-Verify Not Available.”

Furthermore, any TNCs that were not able to be resolved due to the shutdown need to be addressed during this time. If an employee has received a TNC and notified the employer of his or her intention to contest it by February 11, employers must add ten federal business days to the date on the worker’s “Referral Date Confirmation” notice. Federal business days are Monday through Friday and do not include federal holidays. The employee must contact the SSA or DHS by this adjusted date to begin resolving the TNC. For TNC cases that were referred after E-Verify resumed operations, there is no need to add days to the referral date.

Again, as E-Verify was not available for federal contractor enrollment or use during the government shutdown, DHS has reiterated that any calendar day during which E-Verify was unavailable will not count towards the federal contractor deadlines found in the Employment Eligibility Verification Federal Acquisition Regulation. Federal contractors should contact their contracting officer for more information about the impact of the government shutdown on their operations related to E-Verify.

If you have any questions on this topic or need assistance, please contact our Labor & Employment Law Practice Group. We encourage you to subscribe to our Labor & Employment E-Briefs to get the latest HR news, tips, and updates.

Opportunity Zones: New Tax Incentives for Real Estate Investors and Developers

Today, the U.S. Department of the Treasury published long-awaited regulations on the Opportunity Zones tax incentive program. The Opportunity Zones program aims to promote investment and drive economic growth in low-income or economically disadvantaged communities. The current list of approved Opportunity Zones in Nebraska can be found here, and in Colorado here.

The program is an investor incentive that pertains exclusively to capital gains. If an investor sells an appreciated asset, the investor may reinvest the gains with an investment fund, known as a Qualified Opportunity Fund (“QOF”). In turn, the QOF invests in stock, partnership interests and tangible property of businesses located within an Opportunity Zone. The QOF must substantially improve any property owned by a business it invests in.

The program allows investors with capital gains tax liabilities to receive favorable tax treatment such as (1) temporary deferral, (2) step-up in basis, and (3) avoidance of additional capital gains taxes. The longer the investment in the QOF is held, the greater the capital gains tax relief for investors. More specifically, investors can defer tax on any prior gains until the date on which an investment is sold or exchanged, or December 31, 2026, whichever is earliest. If the investment is held for five or seven years, the investor receives a step-up in basis of 10% or 15% of the deferred capital gains, respectively. In addition, if the investor holds the investment for at least ten years, the investor would be eligible for an increase in basis equal to the fair market value of the investment on the date that the investment is sold or exchanged. A taxpayer must generally invest in a QOF within 180 days from the date of the sale or exchange giving rise to the gain.

As previously mentioned, the Treasury Department finally released proposed regulations to provide additional guidance regarding the Opportunity Zones tax incentive. The guidance issued thus far clarifies what gains qualify for deferral, who can invest in Opportunity Zones, and parameters for establishing a Qualified Opportunity Fund. According to the U.S. Department of the Treasury, additional guidance will be issued “in the near future,” which we hope means before the end of the year. Although this preliminary guidance is informative, without further guidance and final regulations, real estate investors and developers are left uncertain as to whether the benefit program will work as intended.

If you have any questions or want to learn more about the Opportunity Zones tax incentive, please contact one of Woods & Aitken LLP’s Real Estate Attorneys.

New Guidance on Independent Contractor Classification

Earlier this summer, the Wage and Hour Division of the Department of Labor (“DOL”) issued a Field Assistance Bulletin (“Bulletin”) on independent contractor classification in the caregiver registry industry. The Bulletin provides the first substantive guidance from the new administration on structuring independent contractor arrangements since the DOL withdrew its 2015 Administrative Interpretation last June.

While the new Bulletin focuses on factors to determine whether an employment relationship exists between a registry and a caregiver, other industries should note the significance of this Bulletin as well. Combined with the 2017 retraction of the Administrative Interpretation of the independent contractor guidance issued during the Obama administration in 2015, this Bulletin indicates a continued shift back to the traditional, multifactor balancing test previously used by the DOL and courts. The Bulletin lays out numerous factors that a DOL investigator may consider when determining whether a covered worker should be classified as an independent contractor or as an employee. For example, practices that do not suggest an employer-employee relationship include:

  1. Conducting background checks, including confirming credentials and contacting professional references;
  2. Determining what work the service provider is willing to perform, their target compensation, their availability, and other personal preferences;
  3. Interviewing the client to determine the needs of the client, the client’s budget, and the client’s personal preferences;
  4. Charging a fee for administrative services for the client, such as fees for recordkeeping, invoicing, collecting, and administering payroll;
  5. Posting available positions online for such service providers to screen and consider;
  6. Providing information to service providers and clients regarding typical pay rates in the area;
  7. Acting as a liaison between the service provider and the client in the process of the negotiating compensation; and
  8. Providing the service provider with the opportunity to purchase necessary equipment from the business or a third party.

Alternatively, activities that will suggest an employer-employee relationship, include:

  1. Suggesting or determining the rate to be paid to the service provider;
  2. Exercising control over the service provider’s schedule;
  3. Exercising any level of control over discipline;
  4. Interviewing candidates to evaluate subjective factors for the client;
  5. Exercising any control over hiring and firing decisions;
  6. Offering work assignments to select service providers based on the business’s own criteria;
  7. Assigning specific service providers to specific clients;
  8. Directing service providers on how to perform the work;
  9. Monitoring, supervising, or evaluating the service provider’s performance;
  10. Charging fees for ongoing services to be provided by the service provider; and
  11. Directing payment of its own funds to the service provider, even if later reimbursed by the client.

The DOL made clear that “the analysis does not depend on any single factor.”  Rather, it “will consider the totality of the circumstances to evaluate whether an employment relationship exists.”

While the Bulletin is limited on its face to caregiver registries, it signals a transition back to the historical approach previously employed by the DOL—focusing on the totality of the circumstances to reach the appropriate classification with a primary focus on the extent of control over the worker. Employers should consider how the DOL’s new guidance can assist them in structuring their independent contractor relationships to avoid reclassification.

If you have any questions on this topic or need assistance, please contact our Labor & Employment Law Practice Group. We encourage you to subscribe to our Labor & Employment E-Briefs to get the latest HR news, tips, and updates.

Be Aware: You Might Be Punished for Unwarranted Threats on Your Subcontractor

Don’t make unwarranted threats of liquidated damages on your subcontractors, and don’t hold them to unreasonable, unconstructible standards. This might sound obvious, but for some contractors, it’s not. After the Eighth Circuit Court of Appeals’ recent decision in Randy Kinder Excavating, Inc. v. JA Manning Construction Company, Inc., 899 F.3d 511 (8th Cir. 2018), a contractor that doesn’t heed this advice may expose itself to damages for breach of contract.

In Randy Kinder, the U.S. Army Corps of Engineers contracted with a general contractor for the construction of a pumping station to manage the water levels in the White River. The general contractor hired a subcontractor to engineer and construct a mechanically stabilized earth wall. The subcontractor couldn’t begin work until only a short number of days before the project was scheduled to be complete due to numerous weather delays and incomplete predecessor activities. Despite the subcontractor not causing any delays, the general contractor repeatedly threatened the subcontractor with liquidated damages if it didn’t meet the original schedule – all the while telling the government that the schedule needed to be changed because of recurring weather delays.

The general contractor also demanded the subcontractor place its mechanized walls with exactitude and absolutely no variance between the walls. The subcontractor objected, stating industry standards always permitted a minimum variance. The general contractor ultimately terminated the subcontractor because it failed to place the walls with exactitude. When the general contractor attempted to find a replacement subcontractor, no replacement subcontractor would agree to construct the walls without a minimum variance.

The general contractor sued the subcontractor. The Eighth Circuit, however, sided with the subcontractor, awarding it damages. The Court found that the general contractor made unjustified threats to assess liquidated damages after the evidence showed the subcontractor caused none of the project’s delays. The Court also determined that the general contractor wrongfully terminated the subcontract when the general contractor unreasonably and arbitrarily held the subcontractor to an unconstructible standard by requiring exactitude in building the walls. Ultimately, the Court held that the subcontractor was entitled to over $215,000. In the end, reasonableness and fairness won over the judge at trial.

Diplomacy and reasonableness is key when a contractor is under pressure. In Randy Kinder, the general contractor was under substantial time constraints and pressure from the owner, but it attempted to unjustifiably pass along that pressure to its subcontractors. When under fire, contractors must learn to manage both owner expectations and their subcontractors’ work to avoid unwanted consequences. A successful project is only as good as a contractor’s ability to work together with all project participants.

If you have any questions or need assistance, please contact one of Woods & Aitken’s Construction Attorneys. For additional construction news, tips, and updates, we encourage you to view our Construction E-Brief archives.

New Disclosure Requirement for Employment Background Checks

The Fair Credit Reporting Act (“FCRA”) imposes specific requirements on employers and consumer reporting agencies (“CRAs”) when conducting background checks on employees and job applicants. Employers must adhere to a rigorous set of notice, disclosure, and consent requirements when obtaining background checks from CRAs and when taking any adverse action against employees or job applicants due to information obtained through these consumer reports.

Specifically, the FCRA requires employers to provide a detailed disclosure form, entitled “Summary of Rights Under the Federal Credit Reporting Act,” to employees and job applicants before conducting an investigative background check or taking any adverse action based on information obtained through a consumer report. The purpose of the form is not only to explain major consumer rights under the FCRA, but also to give affected individuals the opportunity to explain and dispute any incorrect information that may be contained in the consumer report.

On September 12, 2018, the Consumer Financial Protection Bureau issued a new version of this disclosure form. The revision reflects new legislation passed earlier this year that amended the FCRA to: (1) grant consumers the right to place a “security freeze” on their credit report, which will prohibit CRAs from releasing information in the report without express authorization from the consumer; and (2) extend the minimum time period that CRAs must include an initial fraud alert in a consumer’s file to one year.  Employers are required to use the updated disclosure form starting September 21, 2018.

Employers should update their files to reflect the new “Summary of Rights Under the Federal Credit Reporting Act” and should verify that the CRAs used to conduct credit or background checks are using the correct version of this disclosure. Failure to use the updated form exposes employers to significant legal risk, including government penalties and private lawsuits. The new form can be found here:

If you have any questions on this topic or need assistance, please contact our Labor & Employment Law Practice Group. We encourage you to subscribe to our Labor & Employment E-Briefs to get the latest HR news, tips, and updates.

“Off Duty” Time Spent on Voluntary Wellness-Related Activities is Non-Compensable

Last month, the Trump Administration continued to reaffirm its pro-business regulatory stance with the issuance of four new Department of Labor (“DOL”) opinion letters interpreting various aspects of the Fair Labor Standards Act (“FLSA”). In one of these opinion letters, the DOL addressed whether the FLSA requires compensation for the time employees spend voluntarily participating in certain wellness activities, biometric screenings, and benefits fairs. The employer allowed its employees, both during and outside of regular working hours, to voluntarily participate in various activities, including:

  • Biometric screenings, which tested the employee’s cholesterol levels, blood pressure, and nicotine usage;

  • Wellness activities, including: (1) attending an in-person health education class and lecture, (2) taking an employer-facilitated gym class or using the employer-provided gym, (3) participating in telephonic health coaching and online health education classes through an outside vendor facilitated by the employer, (4) participating in Weight Watchers, and (5) voluntarily engaging in a fitness activity (e.g., going to personal gym, exercising outdoors, participating in a Fitbit challenge); and

  • Benefits fairs, which informed employees about financial planning, employer-provided benefits, and college attendance opportunities.

These activities were in no way related to the employees’ job functions or duties. However, by participating in these activities, the employees were able to decrease their health insurance deductibles. The employer did not pay employees for the time spent engaging in these activities and claimed it did not receive any direct financial benefit as a result of the employee participation.

The DOL first noted that whether the time is compensable hinges on whether it is “predominantly for the employer’s benefit or for the employee’s.” An employee is considered to be “off duty” during periods when he or she “is completely relieved from duty and which are long enough to enable him to use the time effectively for his own purposes.”

In concluding that the time spent participating in these activities was non-compensable, the DOL determined that these voluntary wellness-related activities predominantly benefited the employees because the employee received a direct financial benefit (i.e., reduced health insurance deductibles) and allowed the employee to make more informed decisions about matters unrelated to their job-related duties. The DOL also found that the time qualified as “off duty” and was being used by employees for their own purposes—an interesting determination, given that some of these wellness-related activities occurred during regular working hours. That is, under other rules governing the compensability of time (e.g., attendance at lectures, meetings, and training programs), the fact that the activity occurs during regular working hours is sufficient to qualify such time as compensable. In this case, however, the DOL found that the time the employees spent at these activities was not “work” under the FLSA and was non-compensable, “off duty” time.

Notably, the opinion letter did not address what indirect benefit, if any, the employer may have received from the employees’ participation in these activities and did not define when the reduction in health insurance premiums made the employees’ participation in such activities less “voluntary.” Finally, the DOL highlighted that under 29 C.F.R. § 785.18—which states that work breaks up to 20 minutes are ordinarily compensable, regardless of how an employee chooses to spend his or her time during the break—the employer would still be obligated to compensate employees for 20-minute breaks, even if the employee chooses to spend it participating in the wellness activities, biometric screenings, and benefit fairs.

If you have any questions on this topic or need assistance, please contact our Labor & Employment Law Practice Group. We encourage you to subscribe to our Labor & Employment E-Briefs to get the latest HR news, tips, and updates.

Football Training Camp – Oral Orders and Waiver Language

The opening of football training camps reminds us to work on the basics. One of the most used sports metaphors is that good football teams know how to “block and tackle.” In football, blocking and tackling are the fundamentals of the sport. 

On construction projects and the administration of contracts, there are similar fundamentals. Two of these fundamentals were recently contained in a court case from the U.S. District Court for the Eastern District of New York. Superior Site Work Inc., v. NASDI, LLC,, 2018 WL 3716891 (Aug. 3, 2018). This case involved multiple claims between multiple parties that were addressed and partially resolved by the court before trial. This E-Brief will highlight two important project fundamentals. Although, this decision was based on New York law, these basic fundamentals exist in many states.

Changes Can Be Orally Ordered – Even if a contract requires that extra work be ordered in writing, a party that knowingly receives and accepts the benefits of extra work that was orally directed may be liable for the work. Orally ordering and accepting extra work may constitute a waiver of a written requirement that extra work be ordered in writing.

  1. A Waiver Means What It Says – When a written document is clear and unambiguous, the document will generally be enforced. This is regardless of one party’s claim that the party intended something different. This is especially important when a release is executed that states the party has waived “any and all” claims.
  2. These two concepts arise on a significant number of small and large construction projects. All parties should understand that their day-to-day behavior can change the requirements of their written contract, but at the same time, courts will generally enforce clear waiver language.

“Blocking and Tackling” – Construction Project Basics

  1. Act Consistent with the Contract Document – Have your project team’s actual procedures follow the written agreement; and
  2. Read and Understand What You Sign – Understand that clear waivers mean what they say and courts will generally enforce the language. 

If you have any questions or need assistance, please contact one of Woods & Aitken’s Construction Attorneys. For additional construction news, tips, and updates, we encourage you to view our Construction E-Brief archives.

Does a General Contractor Have a Duty to Provide a Safe Place to Work for its Subcontractors’ Employees?

Generally, an entity that retains an independent contractor is not liable for injuries caused by the acts or omissions of the independent contractor or the independent contractor’s employees. However, there are exceptions to this general rule when the entity retains control over the independent contractor’s work or has a non-delegable duty to protect others from harm. For example, non-delegable duties can include: (1) the duty of one in possession and control of premises to provide a safe place to work; (2) a duty imposed by statute or rule of law; and (3) the duty of due care when the work involves special risks or dangers. In a recent case, the Nebraska Court of Appeals considered whether a general contractor in possession and control of a worksite has a duty to provide a safe place to work for its subcontractors’ employees.

In Thomas v. Kiewit Building Group, Inc., a general contractor, Kiewit, was sued by one of its subcontractor’s employees when the employee slipped and fell on sand at the TD Ameritrade jobsite. The ironworker was working on the top floor of the TD Ameritrade building in the winter of 2012, which was not yet enclosed, leaving the floor exposed to ice, snow, and other conditions. To prevent the concrete floor from becoming icy, sand was spread on the icy areas of the floor. As the floor became dry, some of the sand remained on the floor, causing the employee to slip and fall while working. The employee was paid workers’ compensation benefits by its employer, Kiewit’s subcontractor. Thereafter, the employee filed suit against Kiewit for negligence.

The employee alleged that as the general contractor in possession and control of the construction site, Kiewit had a duty to provide a safe place to work and to keep the premises reasonably safe for workers on the construction site, and that Kiewit had a further duty to protect and/or warn workers against dangerous conditions on the construction premises. The employee also alleged that Kiewit created and knew of the dangerous condition resulting from slippery, sandy floors and that Kiewit knew or should have known that the dangerous condition involved an unreasonable risk of harm to workers.

The trial court dismissed the case, finding that no reasonable jury could find Kiewit liable for the employee’s injuries. On appeal, the Nebraska Court of Appeals emphasized that a general contractor in possession and control of the premises is only liable when the subcontractor’s employee is injured because the workplace premises were not safe. It is not liable when an employee is injured due to specific actions or inactions involved in the construction process. Similarly, a possessor of property is not liable for injury to an independent contractor’s employee caused by a dangerous condition that arose out of the contractor’s work, as distinguished from a condition of the property or a structure on the property. 

The appellate court considered the following evidence offered by the employee:

  • Kiewit had responsibility overall for safety on the jobsite
  • Kiewit was responsible for initiating, maintaining, and supervising all safety precautions
  • Kiewit did walk-throughs of different areas throughout the jobsite each day and took
    photographs to document inspections and to show the subcontractors any deficiencies that were found so they could be corrected
  • Kiewit took care of the main walking paths, keeping them clear and removing debris left behind
  • Kiewit laborers were the only persons known to have spread sand on the jobsite
  • Kiewit cleaned up the sand after employee fell

After reviewing the factors above, the court determined that a reasonable jury could find that Kiewit maintained possession and control of the premises and, therefore had a duty to provide a safe place to work for the employees of the subcontractor. Further, based on the evidence presented by the employee, a reasonable jury could determine that although the sand was placed on the floor to improve safety and prevent workers from slipping on icy conditions, once the concrete floor became dry it arguably created a dangerous silk condition for the employee. The court overturned the trial court’s dismissal, and remanded the case to allow a jury to decide whether Kiewit is liable for the employee’s injuries.

As this recent opinion makes clear, if a general contractor is in possession and control of the construction site it has an obligation to provide a safe place to work. Moreover, this duty is non-delegable, which means that a general contractor in possession or control of the premises cannot contractually shift the duty to keep the premises reasonably safe to its subcontractors. Specifically, if a general contractor: (1) created the dangerous condition, knew of the condition, or by exercise of reasonable care would have discovered the condition; (2) should have realized the condition involved an unreasonable risk of harm to the injured party; (3) should have expected that the injured party would not discover or realize the danger or would fail to protect himself or herself against the danger; and (4) failed to use reasonable care to protect against the danger, then the general contractor may be liable for injuries caused by the dangerous condition.

Note that this differs from the concept of vicarious liability, which may be imposed upon a general contractor for injuries arising out of the negligence of its subcontractor when the general contractor has possession and control of the specific area in which the employee is injured or has actual constructive knowledge of the danger.

Accordingly, general contractors should take care to ensure they have an effective overall safety program in place to uncover potentially dangerous conditions on the jobsite, even if their downstream contracts allocate safety responsibility to their subcontractors. Further, subcontractors should strive to proactively watch for and report potentially dangerous conditions to the general contractor to ensure the general has actual knowledge of such conditions. While jobsite injuries cannot be fully eliminated, both upstream and downstream contractors can reduce the number of injuries caused by dangerous conditions by working together to identify and address such conditions on site.

If you have any questions or need assistance, please contact one of Woods & Aitken’s Construction Attorneys. For additional construction news, tips, and updates, we encourage you to view our Construction E-Brief archives.