Is the Construction recession in Missouri over?

According to my roving reporter Kate Whitby of Spencer Fane Britt & Browne, LLP, the U.S. Commerce Department is reporting construction rose by 8.2% in April, due primarily to apartment construction. [Single family home construction continue to weaken].

Hope is on the way!!!?

New Missouri Immigration Law and Misclassification of Employees

Just so everyone knows every employer with FIVE or more employees must file 1099 with the Department of Revenue of Missouri......and if you misclassified an employee as an independent contractor will be fine $50 a day up to $50,000!

New Missouri Immigration Legislation

IMMIGRATION – CCR SS HCS HB 1549, 1771, 1395 & 2366 (

Missouri

)

The immigration legislation, HB 1549, 1771, 13954 & 2366, contains a number of new requirements.  The non-employment provisions contained in the bill are:

• The Missouri State Highway Patrol will have officers authorized to enforce federal immigration law through a memorandum of understanding with the U.S. Department of Homeland Security.
• The legislation prohibits any municipality from enacting ‘sanctuary’ policies in relation to illegal immigrants.
• The legislation prohibits public benefits from being disseminated to illegal aliens.  Applicants for public assistance must present proof of lawful status.
• The legislation prohibits the state from issuing a driver’s license to an illegal alien.
• The legislation does not permit an illegal alien to bond out of jail if they are arrested.

Employment related changes to

Missouri

law included in the legislation:

• Requires all employers of five or more employees to submit federal 1099 miscellaneous forms to the state department of revenue. 
• Prohibits an employer, who has or had a minimum of five (5) workers who apparently have performed public works while in that employer’s employment, from knowingly misclassifying a worker as an independent contractor rather than an employee.  Penalties range up to a maximum of $50,000.
• Prohibits an employer from knowingly hiring or continuing to employ an illegal alien. 
• Any contractor with a state contract worth more than $5.000 must participate in the federal work authorization program (E-verify) as a condition of receiving the state contract. 
• The language appears to require every General Contractor and Subcontractor on every project – not just public projects – to have language in their contracts and also obtain a sworn affidavit from each direct lower tier subcontractor attesting that all employees are lawfully present in the U.S. in order to avoid liability if an employer is found to have knowingly hired an illegal alien.
• If an employer is found not to have knowingly employed an illegal alien, the employer must terminate the employment.  If an employer is found to have knowingly hired an illegal alien, that employer will have all of their business licenses suspended for a minimum of 14 days up to a maximum of “forever” suspending the license for repeat offenses. 
• In addition to license suspension, an employer found to have knowingly hired illegal aliens may be debarred from state contracts for a minimum of three years to a maximum of “permanent” debarment for repeat offenses.
• Requires OSHA 10 hour training for all on-site employees.  Penalties include a forfeiture of $2,500 plus $100 per employee per day for violations.

A number of concerns have been raised about the new laws.  Concerns which have been expressed include:

• On the surface, the legislation appears to be susceptible to a constitutional challenge.  Other organizations have mentioned the possibility of a lawsuit.  Future discussion might be considered regarding the potential of a lawsuit.
• The state Attorney General can investigate misclassification of employees if it “appears” the law was violated or if the Attorney General “believes it to be in the public interest that an investigation should be made”.  Concerns were expressed regarding the potential for misuse of this investigative power by unfriendly attorney generals.
• The state Attorney General can utilize state statutes to force testimony during an investigation of misclassification, even if that testimony might conflict with the generally accepted constitutional right against self incrimination.  Concerns have been expressed that the state could potentially misuse this process to “fish” for violations, gather evidence and then seek separate prosecution.
• The required contract language and sworn affidavit from all lower tier contractors appears to apply in all construction settings, not just on public works projects.
• The state immigration law requires termination of individuals reported to be illegal aliens.  While the statute contains immunity from state level employment lawsuits, the legislation does not prevent an employer from being sued in federal court.
• The OSHA 10 hour legislation requires the state department of labor to investigate “any” claim of violation.  While other sections of the legislation have language dealing with frivolous complaints, the OSHA 10 hour law does not contain any prohibition or procedure on frivolous complaints.

Missouri Release of Performance Bonds Required

An interest case for consideration on the differences between performance bond versus a warranty bond:

"At issue here is a performance or completion bond, not a warranty bond. A performance bond protects obligee by obligating the surety to cover any extra costs obligee may incur to complete project if principal defaults." As to compliance issues, record supported award in Contractor's favor against Sub-Contractors, including costs of testing. Contract did not release Sub-Contractors from liability. Homeowners Association was not entitled to damages for repair, nor to attorney fees because it did not prevail.
Essex Contracting, Inc. and Federal Insurance Company, Appellants v. Jefferson County, Missouri, et al., Respondents, Patrick J. Acheson, et al., Intervenors/Respondents, J. H. Berra Paving Co., Inc., Respondent/Cross-Appellant, Boling Concrete Const., Inc., Respondent/Cross-Appellant. Missouri Court of Appeals Eastern District

New Statistics From the EEOC Demonstrate that Workplace Discrimination Claims Continue to Soar . . .

New Statistics From the EEOC Demonstrate that Workplace Discrimination Claims Continue to Soar . . .

The latest annual statistics on discrimination charges filed with the Equal Employment Opportunity Commission (“EEOC”), the federal agency that enforces Title

VII

, suggest that discrimination claims are alive and well in the workplace. All forms of Title

VII

discrimination rose between 2006 and 2007.

TRENDS IN EEOC CHARGES	Number of Cases: 2006	Number of Cases: 2007	% Change
Race	27,238	30,510	+12%
Retaliation	22,555	26,663	+18%
Sex	23,247	24,826	+7%
Age	16,548	19,103	+15%
Disability	15,575	17,734	+14%
National Origin	8,327	9,396	+12%

In 2007, charges of racial bias rose 12% from 2006 (30,000+ cases in 2007), to their highest level in 13 years.  Because race claims are the most common, they are the types of claims company executives need to be most vigilant about. Moreover, as the American workforce absorbs more immigrants, preventing racial discrimination lawsuits is going to require even greater vigilance.

If you have questions, concerns, or have received notification that a current or former employee has filed a Charge of Discrimination, then

Jane

 

Bruer

, an Employment Lawyer with Spencer Fane Britt & Browne, can help.  You can find

Jane

’s contact information at: http://www.spencerfane.com/Attorney/SJane-Bruer.htm

Missouri developer jailed for violating Clean Water Act

Wentzille developer sentenced to 15 months for violating Clean Water Act St. Louis Business Journal Eric Johnson was sentenced to 15 months in prison and ordered to pay $100,000 in restitution for violating the Clean Water Act in association with his Wentzville subdivision development, U.S. Attorney Catherine Hanaway said Tuesday. Johnson, 43, of Springfield, Ill.,pleaded guilty in December to one count of violating the Clean Water Act and one felony count of bank fraud. He admitted with his plea that he failed to maintain runoff controls at his building site, resulting in storm water run-off into Dry Branch Creek, and used his building escrow money to pay other obligations, resulting in the foreclosure and losses to his partner and the lender. Johnson was the owner and operator of a construction site known as Providence on Peine and Providence Meadows developments in Wentzville. He obtained construction storm water permits from the Missouri Department of Natural Resources. In August 2004, inspectors with the Environmental Protection Agency observed numerous permit violations at both Providence sites, including lack of inspections and failure to evaluate, maintain, and implement runoff controls, resulting in off-site migration of a significant amount of sediment and accumulation of sediment in Dry Branch Creek, according to a release from Hanaway's office. Johnson was in the business of developing and building residential subdivisions in both St. Charles and Lincoln counties from 2003 to 2006. He had a loan with First Service Bank for $2.6 million to develop a residential subdivision known as Woodsmill Estates. An escrow account was set up at Commonwealth Land Title Insurance Co. to pay subcontractors of the development. However, during the time of this loan, Johnson used the escrow money to pay subcontractors and other bills for other projects, according to the release. The bank ultimately discovered this practice and foreclosed on the loan, which resulted in a loss to the bank in excess of $100,000. Additionally, Johnson's business partner, who co-signed on the loan, saw a loss between $400,000 and $500,000.

An interesting insurance policy interpretation question

Water Damage Exclusion Trumps Wind Cause Argument

Concurrent Causation Policy Language Supports Exclusion

Bao v. Liberty Mutual Fire Ins. Co.,--- F.Supp.2d ---, 2008 WL 542384, (D.Md., Feb. 27, 2008)

This breach of contract claim arose out of a denial of insurance coverage by Liberty Mutual Fire Insurance Company. Theresa Bao had an all-risk home insurance policy with Liberty Mutual when her Baltimore home was damaged during a strong wind and rain storm. Bao’s home inspector concluded that the home was damaged when a wind-blown object broke the sliding glass door and, consequently, rain entered the basement and collected at the basement floor.

Conversely, Liberty Mutual’s inspector claimed that the damage occurred after water accumulated in the outside basement stairwell leading to the glass door, causing the door to break and water to enter the basement. Bao’s insurance plan excluded water damage, and included “surface water” in the definition of water damage. Liberty Mutual denied coverage for damage to Bao’s basement. Bao brought suit with U.S. District Court. Liberty Mutual moved for summary judgment.

The District Court first found that water from rain constituted “surface water” under Maryland case law. Bao then argued that the damage here was the direct result of wind, not water, and thus, should be covered. The Court rejected this argument, because the policy stated that damage from wind was only covered if it was not first excluded by the water damage exclusion. Because the damage fell under a specific exclusion, in these particular facts, the Court found that the policy did not permit Bao to circumvent the water damage clause.

Additionally, Bao argued a matter of first impression before the Court, whether the District should accept the “efficient proximate cause” argument. Under this reasoning, even if the exclusion was applicable and water damage was excluded, the wind damage occurred prior to the water damage, and thus should be considered as the proximate cause of the damage.

The Court rejected the proximate cause reasoning and supported the “concurrent causation” scheme found in the policy language. Under this reasoning, an insurance plan can exclude certain types of damage, and the issue of proximate cause will not affect the exclusions.

The District Court granted summary judgment to Liberty Mutual.

The importance of accurately complying with the Kansas mechanic's lien statute!

Court of Appeals of Kansas.

Douglas BUCHANAN, Appellee,

v.

Jerry W. OVERLEY and Carol J. Overley, Appellants,

and

Community Bank of Wichita, Inc., Appellee.

No. 97,329.

March 7, 2008.

Background: Contractor for construction of single-family home petitioned for foreclosure of mechanic's lien. The District Court, Sedgwick County, Karl W. Friedel, J., ordered foreclosure. Homeowners appealed.

Holding: The Court of Appeals, McAnany, J., held that contractor did not strictly comply with requirement, in mechanic's lien statute, of verifying that the contractor's address, as used by suppliers on a number of the bills in exhibit to lien statement, was sufficient for service of process upon the contractor.

Reversed.

Bankruptcy advise for Contractors

Well, I hate to say it but it is time to start the process of learning about bankruptcy and what to do when this terror shows up at your doorstep......look at these stats from the affluent county outside of Kansas City:

Johnson

County

Appraisers

Update

 

Foreclosures are impacting values in

Johnson

County

            2007 5-10% of sales were foreclosures

            Jan-Feb of 2008 25% of sales were foreclosures

Changes in Property Valuation – instead of using 19 months of sales, the appraisers’ office is now using 10-11 months of sales in 2007 for valuation and only 3 comps instead of 5 – notices were just recently mailed out

Total residential value in

Johnson

County

rose 2.39%, Agricultural Value rose 113.45%

New Construction – Building permits down 25% from 2006-2007 From 3200 permits to 1700 permits current, Douglas County (Lawrence) has issued 2 permits Jan-Feb 2008 – we have 6.9 years worth of vacant lots in Johnson County

Sales prices by area for 2007

• Area 310 up 7.9%
• Area 315 down .9%
• Area 320 up 8.5%
• Area 325 down .5%
• Area 330 up 6.9%
• Area 335 down .5%
• Area 340 up 1.3%
• Area 345 up 3.9%

Old Leawood had the most appreciation – up 4.12% and Lenexa West of I-35 (Falcon Neighborhoods) most deprecation – down 3.08%

Average Sales Price  - Resales $244,041 and New Sales $380,083

Update on Immigration issues for the Heartland: No Match Letters Procedures

Please read, review and most of all......get ready for the government's efforts to deal with I-9 issues!

Procedures for Employers Who Receive a No-Match Letter (03/26/2008)

Supplemental Proposed Rule: http://www.dhs.gov/xlibrary/assets/press_nomatch-snprm.pdf

Department of Homeland Security (DHS) filed in the Federal Register a "supplemental proposed rule" entitled "Safe Harbor Procedures for Employers Who Receive a No-Match Letter," and invited public comments to be filed on or before April 25, 2008. The proposed rule does not contain an effective date. DHS previously filed a "final rule" on August 15, 2007 but implementation of that rule was preliminarily enjoined by the United States District Court for the Northern District of California on October 10, 2007. The district court based its preliminary injunction on three findings. According to DHS, "This supplemental proposed rule clarifies certain aspects of the August 2007 Final Rule and responds to the three findings underlying the district court's injunction."

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