Legal Tools for the Contractor’s Toolbox

August 8th, 2012

I was just thinking about two recent clients who were owed money by owners. One had a contract that was not in compliance with the Massachusetts Home Improvement Contractor Statute and had waited a long time to pursue his money. The other had a contract that fully protected him and contacted me once communication had broken down with the customer. In the first case, my client ended up writing the homeowner a check because he couldn’t face the risk of the multiple damages, attorney’s fees, interest and costs that are available to the homeowner under the Consumer Protection Statute (c. 93A). In the case of the second, I had no qualms about filing a mechanic’s lien and pursuing payment aggressively because my client was in full compliance with state law.

Just as no respectable contractor would work with poor quality tools, contractors and construction companies should make sure that they are working with high-quality legal “tools” that will protect them in the event of a dispute or investigation by regulating authorities.

So, here is a list of the legal tools that should be in your toolbox:

Make sure you have all required registrations for your field. That includes staying up-to-date on developments in the construction arena. Are you familiar with the special licensing required for roofers, windows and siding, demolition, etc. Do you know about the lead law for residential renovation work? Are you aware of the new continuing education requirement for contractors?
Invest in a good contract. The Massachusetts Home Improvement Contractor Statute (142A) has numerous requirements for contracts for home renovation work. However, that contract does not necessarily have clauses that protect you. For example, if you don’t have a provision that allows you to recover your attorney’s fees if you have to pursue payment from a client, you can’t collect. Contracts for new construction are different and should not be the same as your renovation contract. All contractors should have contracts with their subcontractors. I have written on this extensively in other posts.
Use mechanic’s liens. Mechanic’s liens are a great tool for getting paid. However, the deadlines and procedures for filing them are very strict, and if you don’t do it correctly and you miss the deadline, it is usually impossible to fix.
Demand letters. When clients call, they often ask about filing suit when a dispute occurs. However, filing suit should really be the last resort when there is a dispute. A well-written demand letter can frequently resolve a dispute, and is much less expensive and stressful then a full-blown lawsuit.
Your lawyer. Clients should call me before an issue arises. I draft contracts on a flat-fee basis and tell clients to call me (for no additional charge) when they want to delete clauses or add language for a particular job. I want to become familiar with their businesses and act as a trusted advisor. Preventing problems before they occur is much less expensive and stressful and enables you to focus on your business. If a dispute does happen, we will discuss the best way to resolve it. We will consider mediation and arbitration as well as the possibility of filing a lawsuit with your goals in mind.
A true craftsman does not work at a job without the best possible tools. Make sure that you protect your business with the proper legal tools as well.

Andrea Goldman

posted by: joelrosen in BUSINESS ADVICE & LITIGATION, CONSTRUCTION CONTRACTS & DISPUTES | No Comments

Mechanic’s Liens Basics

May 8th, 2012

Although I have written about mechanic’s liens in the past, the power of a lien cannot be underestimated and bears repeating.  The right to file a lien is a huge advantage for contractors and construction companies, and is a unique tool that helps contractors get paid.  As long as the construction company has a written contract with the owner, it can file a lien on a property within ninety days of the date the it last worked at the project.  If the contractor is a subcontractor, the time for filing is extended to within ninety days of the last date that someone working by and through the general contractor worked at the project.  These deadlines are strict, and if they are missed, then the company can no longer file a valid mechanic’s lien.

A lien consists of two documents; a Notice of Contract and a Statement of Account.  The Notice of Contract may be filed at the Registry of Deeds at the start of a project to put the public on notice that the company is working at the property. The Statement of Account provides the details of the contract price, the amount paid, and the amount still owed.  The lien is a public record that states money is still owed for work on the property.  These two documents constitute the mechanic’s lien.

What does a lien do?  A lien causes a blemish on the title.  What this means is if the owner has a construction loan, or is trying to refinance or sell the property, the bank will not disburse funds until the lien is removed.  Even if a property owner is not trying to currently sell or refinance, most owners hate having a lien on their property.  They are usually extremely motivated to have the lien removed.

There are only three ways to have a lien dissolved.  One is to settle with the general or subcontractor and have them file a Notice of Dissolution of Lien.  The second is to go to court to have the lien removed because the construction company did not follow the proper procedure for “perfecting” or finalizing the lien.  If the lien is filed too late, the company fails to file suit within ninety days of recording the lien, or if the lien fails in some other way, the owner can file suit to have the lien dissolved.  Finally, the owner can purchase a bond to “bond off” the lien, but this is usually a costly remedy.

If a construction company misses the window for filing a lien, it can still move for a real estate attachment, but this requires filing an action with the court, and it must show a “likelihood of success on the merits.”  A mechanic’s lien can be filed by a contractor as of right; a party can only file a real estate attachment if a court grants them the right to do so.  That is why a mechanic’s lien is a tool that cannot be ignored.

Liens can be an incredibly powerful tool when a contractor or construction company is owed money.  However, unlike most legal actions, the contractor may lose his opportunity to record a valid lien if he does not follow the proper procedures.

Andrea Goldman

posted by: joelrosen in CONSTRUCTION CONTRACTS & DISPUTES | No Comments

When is your construction employee entitled to the Prevailing Wage?

March 15th, 2012

Not everyone who works on a public construction project in Massachusetts has to be in a union.  However, to prevent ordinary workers from undercutting the unions, non-union shops have to pay their employees approximately what union workers make.   Prior to the start of any public works project, a list of the jobs which are to be employed on the project is submitted to the Director of the Department of Labor Standards.  The Director then determines a rate of wages for certain classifications of jobs.  The awarding authority is then furnished with a schedule of such wages and updates these wages on a yearly basis until the project is complete.  This higher hourly rate is called the prevailing wage and is mandated by the Massachusetts Prevailing Wage Laws, G.L. c. 149 §27.   

If you are in the construction business, you want to pay your workers what the law requires.  A basic understanding how workers should be classified under a Director’s schedule of wages is therefore extremely important.   Failure to correctly classify workers can expose employers to significant fines and expensive lawsuits.  A worker who is not paid the appropriate prevailing wage has the statutory right to bring a lawsuit in his or her own name after initially filing a complaint with the Attorney General.  If successful, the employee is entitled to mandatory treble damages for any lost wages, even if it is the employer’s first offense and/or even if the employer’s violation was unintentional. 

For the most part workers will fall neatly under one of the enumerated categories of jobs on the director’s schedule of wages; however, some workers, despite their job title, perform duties which make it difficult to determine whether or not they should be paid the higher prevailing wage.  For example, workers who deliver materials which are not used in road construction do not generally fall under one of the Director’s classifications.  However, when those same workers are in some way “engaged in construction activity” in connection with a public works project, then regardless of their job title, they may be entitled to the prevailing wage.

While there is no bright line rule for an employer to know whether an employee is “engaged in construction activity,” courts have interpreted this phrase as requiring that there be a “significant nexus between the employee’s work and the site of the construction project.”   In other words, regardless of what your employee’s job title may be, an employer should always ask: What exactly is my worker required do at the public works site?   If your employee is required to perform any type of labor on site or in connection with the construction project, that employee should most likely be paid the prevailing wage.   The Department of Labor Standards publishes annual topical outlines which are useful to employers seeking guidance on specific worker classifications. The most recent can be found at http://www.mass.gov/lwd/docs/dos/prevaling-wage/interim-topical-outline.pdf 

Peter Fisher

posted by: joelrosen in BUSINESS, BUSINESS ADVICE & LITIGATION, CONSTRUCTION CONTRACTS & DISPUTES, EMPLOYMENT & DISCRIMATION | 17 Comments

Masssachusetts Data Privacy Update

February 29th, 2012

Most businesses that handle “personal information” of Massachusetts’ residents (i.e., a resident’s name and financial information, such as driver’s license, credit card number or social security number) must satisfy additional requirements of the Massachusetts data security regulations (201 CMR 17:00, et seq.) by March 1, 2012.  The regulations, which took effect March 1, 2010, require businesses to have adequate protections in place to ensure that such personal information is not disclosed or used in an unauthorized manner.

Businesses must take further steps to comply with the regulations by ensuring that their service providers are also in compliance by March 1, 2012.  Specifically, such businesses must have investigated the adequacy and appropriateness of service providers’ data security policies and practices.  In addition, they must have contracts in place which demonstrate that they are in compliance with the regulations. Service providers may include office cleaning services, payroll companies, internet servers or host providers, or billing companies, as well as others.

Companies affected by this law should check their contracts with their service providers to determine whether the contracts comply with the regulations.  If not, such contracts should be amended as soon as possible.  Simply receiving a letter from your services providers stating that they are in compliance is not sufficient.  It is advisable that the contracts with service providers include additional language to protect your business, such as the following:

  • Include language allowing you the right to audit the service provider’s compliance with the regulations.
  • Require the service provider to inform you of any breach of the regulations
  • Include a clause that requires your provider to indemnify (pay you back) if a claim is made against you as a result of their actions.
  • State that they must return or destroy personal information upon contract termination.
             -by Coale Parker
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How to Avoid Being Sued After You Fire an Employee

February 24th, 2012

Employers must be sensitive to the emotional reactions of employees when they have been fired.  An employee who realizes he may have played a part in his separation will respond differently from an employee who comes to the conclusion that he was discriminated against or fired illegally. There are steps an employer can take to prevent claims for unlawful termination.

When an employee is terminated for unsatisfactory performance, it should come as no surprise.  Unless the performance is egregious, the employee should be notified that his performance must be improved, with guidance as to how to reach specific goals.  This is not a legal requirement, but in most cases, it is more efficient to help an employee correct mistakes rather than replace him.  A better atmosphere in the workplace is created generally, and the employee has been warned if there needs to be a termination later on.

One rule is to always document discussions regarding opportunities for improvement. These interactions should be noted in the personnel file shortly thereafter to have a record of what was said.  It’s a good idea to have the employee sign the written document to show he has received it, and he should definitely receive a copy.

Be consistent. Think about chances you have given other employees to improve and why.  Make sure you provide those same opportunities to employees in similar situations and carry through.  Do not tell an employee that he has ninety days to improve, and then terminate him less than one month later.  Be careful not to create the impression that the employee cannot be fired during the probationary period.  Nothing in these conversations should be construed to change the at-will relationship.  Train your managers so that they are aware of how to deal with performance issues with their staff. Your managers represent the company and are the direct communicators with the employee.   For that reason, they should be given guidelines as to how to deal with problematic employees.

If it feels wrong, it probably is.  Place yourself in the employee’s shoes.  How would you react if you were told you were being terminated?  If you would be surprised, then more steps should be taken before you fire the employee.  Finally, seek legal advice before taking action.  If you are uncertain about the legality of the termination, it makes sense to talk to someone who deals with these situations every day.

–Kavita Goyal

posted by: joelrosen in BUSINESS, BUSINESS ADVICE & LITIGATION, EMPLOYMENT & DISCRIMATION | 1 Comment

Why You Need a Social Media Policy

February 8th, 2012

Internet use by employees is a hot topic for most employers.  In addition to the issue of access during work hours, companies face the use of their name in employee blog posts, tweets, Facebook and LinkedIn.  They need to be able to control the content and timing of messages so that proprietary information is not revealed and their image is not damaged.  At the same time, they do not want to interfere with an employee’s first amendment rights.  Even well-meant postings can be damaging.

The purpose of a social media policy is to put the employee on notice as to the employer’s expectations with regard to Internet use.  The employee should know that the policy will be modified as technology develops and changes.  Clear cut guidelines help to prevent misunderstandings and serve to protect the employer. They provide a basis for termination if it is ultimately necessary.

Companies vary widely in their policies regarding employee involvement in the Internet, but one thing is certain:  it is better to put your employees on notice regarding your social media policy rather than facing an unforeseen problem and dealing with it after it occurs.

Employees must first understand that they do not have any right to privacy on their computers at work.  Whatever they write can and may be reviewed by the company.  They are never allowed to reveal confidential or proprietary information.  In addition, they should know the company standards with regard to use of its name.  Some may require prior approval before an employee posts any information regarding the company.  In others, the employer may simply require that the employee state that any posting represents his own views and not that of the employer.  Employees should only write about areas within their control or areas of expertise and should make clear what their position is at their company.  They should keep abreast of company guidelines for using blogs, Twitter, Facebook or LinkedIn.

Workers may never use the internet to make discriminatory or offensive statements about someone.  They should not post political opinions or religious beliefs in the name of their employer.  Pretending to post in the name of another employee should serve as an immediate ground for termination.  Online behavior must reflect the company’s standards and values.

–Andrea Goldman

 

 

 

 

 

 

 

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The Art of Termination

February 6th, 2012
  1. Keep records.  You should be clear in your own mind about why you are terminating the employee.  Unless there is some egregious conduct—fighting, stealing, drug use—you should have written records providing some notice to the employee of the problem and the opportunity to improve.  These records aren’t required, but they will support you if there is a challenge later.  Even if there has been misconduct, you should have a meeting where the employee can give his side of the story.  Take good notes.
  2. Consider the risk.  Unless the employee is in a union or the civil service or has a contract, you can probably end the employment at any time or for any reason.   But you cannot fire an employee because of race, national origin, religion, sexual preference or gender identity.  And you can’t retaliate because an employee has demanded a legal right—like overtime pay or medical leave—or has refused to violate the law.  If you think you may be accused of discrimination or retaliation, be sure you have a sound business reason for what you are about to do and that your treatment of this employee is not more severe than that of other employees who have performed in a similar way.  If you think there may be a claim, contact a lawyer before beginning termination.
  3. Take action.  Nobody likes firing people.  Once you have made the decision, do not delay in order to avoid an unpleasant confrontation.   Just get the termination over with.
  4. Be brief.  An employee who is about to be terminated is rarely surprised.  Avoid awkward prefaces or confessions of your own discomfort.  A good way to start is, “You are being terminated.”  You do not need to give a reason; the employee already knows.  But if you do give a reason, it should be the real reason and should be phrased as succinctly as possible, without anger or regret.  You should not engage in a debate and you should never accept any part of the blame.  The meeting should not take more than ten minutes.
  5. Offer severance.  This is not required, but it’s a nice thing to do if you can afford it.  You can condition a severance payment on the signing of a release.  Especially if you think you may be sued—even if there is no sound basis to do so—a few weeks’ pay is a lot cheaper than fighting a lawsuit or administrative complaint.  Talk to a lawyer before asking for a release and make sure that it has the revocation and waiting periods the various statutes require.
  6. Pay in full.  You have to pay the employee in full on the last day of work.  This includes pay for vacation days the employee was entitled to, but did not receive and commissions and bonuses that are due.  If commissions are going to be due in the future on sales the employee made, you may be required to pay them after termination.
  7. Provide notices.  If the employee is on your health plan, make sure you provide the required COBRA notices that permit coverage to continue.   You also need to provide a notice (which you can get from the state) on how to apply for unemployment benefits.
  8. Protect both parties.  The reasons for termination are ordinarily no one’s business but the employee’s, so share as little information as possible with other workers.  Avoid marching him past his coworkers, standing by as he empties his desk, or taking any action that may embarrass him.   Schedule the meeting for the end of the day. Make sure he surrenders his laptop, passwords, keys, cell phone, etc. and does not take any of the company’s documents or information with him.   Immediately change passwords so he cannot access the computer system.
  9. Question unemployment.  The unemployment system is there to provide a safety net.  But someone who is guilty of misconduct or who violates a uniformly enforced rule cannot collect benefits.  When you receive a form from the state Department of Unemployment Assistance, explain the reason for termination.  Obviously, it should be the same reason you gave the employee.  If you disagree with the Department’s decision, consider filing an appeal.
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Rosen Law Victory Limits the Power of Licensing Boards

December 13th, 2011

          State licensing boards can no longer interpret or enforce OSHA regulations to discipline dentists or other professionals, the Supreme Judicial Court ruled.  

 

          Our client was a dentist who received a surprise inspection by investigators from the Massachusetts Board of Registration in Dentistry. They cited him for 31 deficiencies in the way he ran his practice. After a hearing, the Board found no basis for 25 of those allegations but did find that the dentist had violated six regulations and suspended him for six months. 

          Five of the six infractions were alleged violations of federal workplace regulations under the Occupational Safety and Health Act (“OSHA”). The dental board argued that it had incorporated OSHA into its own regulations. Therefore, it was entitled to enforce federal law. 

          The court found the Board’s position untenable. It noted that the Board possibly interpreted OSHA regulations differently than the federal agency would have done. In fact, we argued, if federal investigators had come to the dentists’ office, they would not have found anything wrong.

          The court went on to say, “The focus of our inquiry, however, does not require us to decide whether the board correctly interpreted these OSHA standards. Our point in referencing the potential misinterpretation is to show that, in invoking the OSHA standards, the board necessarily interpreted, applied, and enforced them. In doing so, the board exposed [this dentist] to the exact danger Congress sought to avoid through the act: that the State would subject workers and employers to duplicative regulation.”

          The decision changes the way state licensing boards do business. It is fundamentally unfair to subject doctors, dentists, and nurses to an inconsistent set of standards. They should know in advance what they are required to do. Now, thanks to the court’s decision in Chadwick v. Board of Registration in Dentistry, they will.

posted by: joelrosen in ADMINISTRATIVE LAW | No Comments

Rosen Law Office Wins Defamation Suit

August 28th, 2011

All our client wanted to do was keep the Haverhill School Department from being sued.

Our client was a member of the school committee.  In a private email message, she urged her colleagues on the committee not to discuss personnel matters in open session.  She pointed out that, years before, the school superintendent had said that a track coach got an unfavorable evaluation and the city got sued.   Here’s what the email said:

“I want to tell you about a risk we take in discussing this in public.  Before I was on the [School Committee, the track coach’s] performance was discussed publicly by SC members and the SC was sued.  It was not a lengthy discussion, it was just a mention that she did something the former Athletic Director didn’t like and the [High School] did not want to re-sign her contract…. If we even mention names of employees who may or may not have done something wrong, we could be sued again and would likely lose….  If we discuss this in public, names should not be used….”

It was good advice, but somehow the newspaper got a copy of the email and reprinted it.  The former track coach saw her name in the paper and sued the city again, naming our client as a codefendant.

The coach later said she wanted people to know about the former lawsuit: that she considered it “a fight for every employee in the City of Haverhill.”  She wanted to ensure public officials complied with their obligations under the law with respect to employee privacy.

But our client agreed with her!  Message received.  Our client was trying to protect the privacy of school employees.  So it was strange that the coach found the message offensive.

The Superior Court dismissed the lawsuit.  First, the Court did not feel that a private email communication to other school committee members was a statement to a third party, as is required for a defamation claim.  Essentially, the City made the statement to itself.

“Second, the court concludes there is nothing in the Email that is ‘reasonably susceptible … to a defamatory meaning,’” the judge wrote.  “The court fails to see how, in the circumstances of this case, the Email in any way discredits [the coach].  The Email makes no statement that would subject [the coach] to ‘hatred, ridicule … [or] contempt.’”

Caputo v. City of Haverhill, ESCV2008-02492.

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A Constitutional Right to Body-Piercing?

June 11th, 2011

A Costco employee had an eyebrow piercing that violated the company’s dress code. Management told her to cover it with a Band-Aid while she was working. This she refused to do. She explained that, as a member of the Church of Body Modification (“CBM”), she had to be a confident role model, proudly displaying her eyebrow jewelry at all times. Members of the CBM believe that–through rituals like piercing, scarring, tattooing and suspension—they strengthen the connection between their bodies, minds, and souls.

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Costco fired her, and she sued. The First Circuit held that Costco would suffer undue hardship if it allowed the employee to display her face jewelry. “Courts have long recognized the importance of personal appearance regulations, even in the face of Title VII challenges.” By allowing an exemption from the dress code, “Costco forfeits its ability to mandate compliance and thus loses control over its public image.”

This was a closer case than one might think. Initially, the Equal Employment Opportunity Commission determined that Costco had violated the employee’s civil rights. And this case may have turned on the fact that Costco was more reasonable in offering accommodations than the plaintiff was in refusing them.

It was a different matter when a high school freshman insisted that her membership in the CBM trumped the school’s dress code. She insisted on keeping her nose stud and got suspended. The federal district court for North Carolina granted an injunction against the enforcement of the dress code. If the student were not permitted to practice her religious beliefs, she would suffer greater harm than the school would, if it relaxed its dress code. The school ultimately abandoned its appeal and paid the plaintiff’s legal fees.

Neither courts nor employers are in a good position to determine whether a religious belief is sincere or not. When an employee complains that a neutral rule is infringing on her religious beliefs, wise employers will make a serious effort to reconcile those beliefs with the legitimate requirements of the business.

posted by: joelrosen in EMPLOYMENT & DISCRIMATION | No Comments
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