New Changes to the FMLA Effective Immediately

On Monday, January 28, 2008, President Bush signed into law legislation that expands the Family and Medical Leave Act’s coverage for family members of employees called for military service. The expansion requires employers to offer up to 12 weeks of unpaid, job-protected leave to employees when a spouse, child or parent is on active duty or is called up for active duty. Leave could be for any “exigency” as defined by regulations to be drafted by the Labor Department. In addition, the new law allows employees who are the spouses, children, parents or next of kin of a service member to take up to 26 weeks of leave under the FMLA to care for a service member injured during military service to the point of being unable to perform his or her duties. The law became effective when it was signed.

2007 AIA 201 - Insurance Provisions

The 2007 AIA 201 contains some significant changes from the 1997 AIA 201. The article addressing insurance, among other provisions, caused the American Subcontractors Association to withhold its endorsement of the 2007 changes. This is not surprising given the shift of risk to the subcontractors. The AIA 201 changes require the subcontractor to maintain both operations hazard coverage and completed operations coverage for each project. In short, operations hazard covers third-party claims for bodily injury and property damage that occur during the course of the project. Completed operations coverage covers third-party claims for bodily injury and property damage for a period of time after the project is complete and work has stopped. The AIA 201 requires that this completed operations coverage stay in place for any maintenance period or for a period specified in the contract documents. Furthermore, the changes to the AIA 2007 significantly increase the project participants who must be named as an additional insured to the subcontractor's policy. For operations hazard coverage, the subcontractor must name the general contractor, the owner, the architect and the architect's consultants. For completed operations hazard coverage, the subcontractor must name the general contractor as an additional insured.

For further information, contact Matt Hjortsberg at 410-583-2400 or Hjortsberg@bowie-jensen.com.

Personal Service Contracts

The doctrine of delectus personae involves contracts where a person agrees to use his/her personal skill and knowledge, and as a result is contracted based on the trust and confidence which is placed in the party personally. This doctrine is applicable to situations where two parties contract to become partners in a business venture. Because the contract is based on the personal trust and confidence between both parties, the doctrine of delectus personae prevents one of the parties from assigning his partnership interest to a third-party.

The use of restrictions for transfer of shares of stock is an example of the actual use of the doctrine. Two parties jointly owning stock in a company can place restrictions on the transfer of their stocks to permit the remaining party to be able to choose his/her future partner in the event the other party chooses to sell his/her stock. Therefore, contracts involving deluctus personae cannot be assigned. It is important to consider the reasons for entering into a contract before putting pen to paper and, if the contract involves personal service or delectus personae, it is equally important to realize that these duties will not be assignable.

Employees Returning from Military Service

New Labor Ruling applicable to employees returning from military service:

Employers must credit National Guard and reservists active duty time towards their eligibility for leave under the Family and Medical Leave Act. Contractors should know that the Department of Labor (“DOL”) recently issued a memorandum that clarifies its position on the rights of returning uniformed service members to family and medical leave, which is governed by the Uniformed Services Employment and Reemployment Rights Act (“USERRA”). USERRA entitles returning service members to all the benefits of employment that they “would have” obtained if they had been continuously employed.

Under ordinary circumstances, a worker becomes eligible for leave under the FMLA after working for a covered employer for at least 12 months, during which he or she completed at least 1,250 hours of work. The DOL has interpreted the protections afforded by USERRA and FMLA together to require employers to count the months and hours that reservists or National Guard members would have worked had they not been called up for military service, when determining the employee’s FMLA eligibility. Thus, the months and hours that the employee would have worked, but for his or her military service, should be combined with the months employed and the hours actually worked to meet the 12-months and the 1250 hours of employment required by the FMLA.

The bottom line is that contractors may hire individuals who are called to active duty within weeks of their hire date and return from active duty eligible for FMLA protected leave from their civilian jobs.

For more information on this subject or other employment law matters, please contact Nicole Windsor at 410-583-2400 or windsor@bowie-jensen.com.

Appeal of Administrative Agency's Decision Affirmed

On January 7, 2008, Michael W. Siri successfully argued on behalf of a firm client – a construction bonding agent – in a case that concerned the issuance and servicing of construction bonds for a Federal project. The Baltimore City Circuit Court upheld the decision of the Maryland Insurance Commissioner that the firm’s client had not acted fraudulently when it obtained or serviced the bonds. Vincent M. Guida wrote the brief and Matt Hjortsberg tried the case before the Office of Administrative Hearings.

Type I Differing Site Condition Claims

A Type I differing site condition arises when the conditions encountered differ from what was indicated in the contract documents. It is distinguished from a Type II differing site condition, which arises when the conditions encountered are of an unusual nature and differ materially from those normally encountered in the kind of work contemplated by the contract. In order to be eligible to recover for a Type I differing site condition, a contractor must first prove, as a threshold matter, that the contract contained some identification of the conditions to be encountered at the site. The contractor must then prove by a preponderance of the evidence that the conditions encountered during the contract performance differed materially from the conditions indicated in the contract. To carry this burden, the contractor must demonstrate that the conditions encountered were not reasonably foreseeable in light of all information available to the contractor when bidding, that the contractor reasonably relied upon its original interpretation of the contract, and that the contractor suffered damages as a result of the material variation between the conditions expected and those encountered.

The Federal Circuit recently addressed a Type I claim made by a dredging contractor. The Court denied the claim on the basis that the information available to the contractor would have revealed the type of conditions that gave rise to the claim. Furthermore, the government located a spreadsheet prepared by the contractor that identified the alleged differing condition.

For further questions, please contact Matt Hjortsberg at 410-583-2400 or at hjortsberg@bowie-jensen.com