2016 Bond Referendum Presented to NUCA of the Carolinas

On Tuesday night, Perry Safran, joined by Stephen Safran and Rebecca Rushton, presented information on the 2016 NC Bond Referendum to members of the National Utility Contractors Association of the Carolinas.  If approved on March 15, 2016, the Bond will provide $309.5 million for utility infrastructure loans and grants across the State without raising state taxes.  The event was sponsored by Safran Law Offices and hosted at N.C. State University’s Lonnie Poole Golf Course Clubhouse.


Click HERE to download a copy of the 2016 Bond Referendum presentation.


Congress Gives OSHA The Opportunity to Increase its Fines up to 82%: What Could This Mean for Your Workplace?

November 3, 2015, gave employers a surprise as part of the bipartisan Federal Budget Agreement (“the Agreement”).  The Agreement permitted the Occupational Safety and Health Administration (“OSHA”) to increase its civil penalties for the first time since 1990.  What does this mean for construction industry employers?  The budget deal could mean an increase in OSHA’s civil penalties of up to 82%.

The “Catch-Up” Increase

While this larger increase would be a one-time increase masked as a “catch-up” increase, the repercussions for the construction industry could be large.  The specifics of the increase are to abide by the Consumer Price Index, but the increase is expected to be as large as 82%, assuming OSHA applies the maximum increase allowed.

Sources say that the current maximum $70,000 fine for Repeat and Willful violations could grow to a maximum of $125,438.  Additionally, the maximum $7,000 fine for Serious and Failure-to-Abate violations could reach as high as $12,744 per offense.

This one-time “catch-up” increase is intended to permit OSHA to “catch up” on lost revenues it could have gained had it not been prohibited from increasing.  However, after this initial increase is implemented, OSHA will also be permitted to increase maximum penalties annually based on the rate of inflation for the prior fiscal year.

These changes are set to go into effect by August 1, 2016.  OSHA is required to publish an interim final rule by July 1, 2016.  At that time, OSHA will disclose how much the agency is going to increase its fines based on the leeway it has been given. 

Current OSHA Requirements and Fines

OSHA requires employers to furnish its employees a place of employment that is free from recognized hazards that cause or might cause death or serious physical harm to its employees.  It further requires employers to comply with occupational safety and health standards that are put into effect by the Occupational Safety and Health Act of 1970.

The penalties OSHA is able to give for violations are broken out into multiple types. Serious violations can range in type, but will often result in a civil penalty of up to $7,000 for each serious violation.  Other violations that carry heftier fines include those that are willful or repeat violations, such as when one is convicted of knowingly making false statements, records, or other documents or representations, resulting in a fine of $10,000.  Another willful violation is when an employer willfully violates an OSHA standard as outlined in the Occupational Health and Safety Act resulting in a maximum fine of $10,000.  Repeat violations along these lines can result in a maximum fine of $20,000.

When an employer fails to abate prior violations for which OSHA has required the employer remedy, the employer may face fines of up to $7,000 for each day during which the failure to fix the violation continues.  When an employer has a non-serious violation, including violation of the posting requirements, or a person who gives advance notice of an inspection, can face penalties ranging anywhere from maximums of $1,000 to $7,000 for each violation.

How Will This Affect the Construction Industry?

It is important to note that OSHA fines come from various actions, and a company’s number of accidents likely wont be a sign of whether they’ll be affected by the increase.  Many sources have anticipated that this fine increase is most likely to affect employers who operate in multiple locations, those in the construction industry where safety may not be as prominent, the manufacturing industry, in industries and with employers who have high turnover, and those employers who are not as sophisticated regarding safety issues.

Multi-location employers are at greater risk because the enforcement agency may be able to generalize the violations across the separate locations.  Construction industry employers are at risk because of the types of work involved, and the particular focus among safety inspectors on the construction industry.  Because construction workers often deal with heavy and large equipment, large sites, challenging work spaces, and performance that spans over longer periods of time, the opportunities for OSHA violations are simply multiplied.  The construction industry also suffers like other industries that experience high turnover, because that turnover demands more training for replacement workers.  When training is needed, time may not always seem available, especially if in the middle of an ongoing project.

The manufacturing industry is at risk because, as in the construction industry, the type of work conducted may tend to be more dangerous or hazardous, and extensive training is often necessary.  Employers who lack sophistication regarding safety issues may be small business owners or even larger businesses that put safety regulations on the back burner to get the job done in an efficient manner, or those unaware of the many OSHA requirements and standards for safety in the workplace.

In anticipation of the increasing fine structure, construction companies should take this opportunity to review their safety strategies for avoiding violations.  If their policies and procedures need to be re-worked, this would be the time to do so.  Periodic policy reviews should be a regular occurrence, and not just a one-time thing.  This increase, and Congress’ permission for OSHA to have continued increases in its fines, is just one more form of encouragement for employers to ensure their employees and their workplaces comply with OSHA standards and regulations.



2015 Summer Construction Conference Wrap-Up

We were so excited to host over 150 clients, guests, and speakers for our fourth annual Summer Construction Conference this morning, at the PNC Arena.  We were also happy to share the event with co-sponsor BB&T Insurance.

Our keynote speaker was John Skvarla, the Secretary of the North Carolina Department of Commerce, who spoke on economic development in the state.  

Our featured panel was moderated by G Patel, President of Eschelon Experiences, and focused on the future of development for Downtown Raleigh.  Our panelists -- Valoree Eikinas with Mulkey Engineering & Consultants, Moss Withers with NAI Carolantic Realty, Jay Bowman with FMI, and Bill King with the Downtown Raleigh Alliance -- brought a multi-disciplinary focus to where the downtown district has been, and where it's going.  Remember that a few years ago, the "Fayetteville Street Mall" was a concrete block in the heart of downtown.  Now we have billions of construction dollars, thousands of apartment units, dozens of restaurants, and plans for a modern urban transportation system.

On behalf of our attorneys and staff, we want to thank everyone for attending.  If you want to revisit any of the presentations, or if you missed the program, please go to the SCC2015 page on our website.  If you have any questions, call or write us. 


New Threshold Amount For Residential Building Permits

By: Rebecca Rushton

On July 13, 2015, North Carolina Governor Pat McCrory signed into law House Bill 255 (Session Law 2015-145).  Among other amendments, the law increases the minimum value of a construction project before a building permit is required. 

Previously, a building permit was required for any construction, installation, or repair to a residential structure that cost more than $5,000.  Under the new law, that threshold amount has been increased to $15,000.  This means that most construction projects on residential buildings that cost less than $15,000 will no longer need a building permit before work begins.  This change will benefit contractors and subcontractors by reducing the amount of red-tape they must cross before beginning new projects. 

The new law does outline a few notable exceptions.  First, the new threshold amount does not apply to any construction, repair, or replacement involving load-bearing structures or roofing.  Second, any work involving electrical wiring or equipment is similarly excluded; however, this does not apply to replacing previously installed fixtures or devices such as water heaters.  Last, the higher threshold amount does not apply to any project using materials not permitted under the North Carolina Uniform Residential Building Code.

Since the law has been ratified by the General Assembly and signed by the Governor, the act will become effective October 1, 2015.


Overtime Overhaul - Extent and Impact of the DOL's Proposed Changes to Overtime Exemptions

On June 30, 2015, the Department of Labor (DOL) published a Notice of Proposed Rulemaking to update the overtime regulations governing the implementation of the Fair Labor and Standards Act (FLSA). This announcement came as no surprise, as President Obama had directed the Secretary of the Labor to review and modernize the overtime exemption regulations in March of 2014 and outlined the proposed changes in a Huffington Post article in June of this year.

The FLSA requires that employees who work more than 40 hours a week are paid time and a half for every extra hour that they work. However, the Act provides overtime exemptions for employees who meet certain criteria. Currently, if an employee meets a set salary threshold; if his or her salary is predetermined and fixed; and his or her job duties involve executive, administrative, or professional responsibilities, then that employee is exempt from overtime pay requirements. The DOL was instructed to examine these exemption regulations and revise them, and it proposed changes in the minimum salary threshold, the highly compensated employee threshold, and the mechanism by which the minimum threshold is determined. 

First, and possibly most importantly, the DOL proposed to set the minimum salary threshold at the 40th percentile of weekly earnings for full-time salaried employees, increasing the current limit of $23,660 per year to $50,440 a year in 2016. That is, to even possibly be considered to be exempt from overtime payments, an employee would have to make a minimum of $50,440 a year. This increase, which doubles the current threshold, would expand overtime coverage from the currently eligible 8% of the workforce to 40% of the workforce. This would extend overtime protections to nearly 5 million additional white-collar workers within the first year. 

Second, the DOL wants to increase the highly compensated employee threshold from $100,000 a year to $122,148 a year, which is the 90th percentile of weekly earnings for full-time salaried workers. With this new proposal, any employee whose annual salary falls above the $122,148 threshold and who performs at least one of the duties of an exempt executive, administrative, or professional employee, is also exempt from overtime payments, even if the employee does not meet the other regulatory requirements. 

Third, the DOL is hoping to establish a system for the minimum salary threshold to be automatically updated so the threshold remains an adequate measure of overtime exemption. This reflects the DOL’s concern that the current threshold did not keep up with increasing rates of inflation; for example, the minimum exemption salary of $23,660 is now below the poverty level for a family of four. Additionally, when the minimum threshold was updated in 2004 to $23,660, this was the first time since the 1970s that the threshold had been changed. Thus, implementing a mechanism for the threshold to automatically update as inflation or salaries change will help ensure it remains at a realistic and helpful level.

Predictably, the proposals have been met with mixed reviews from business and labor advocates. Businesses are nervous about the prospect of having to pay overtime to more employees, but are relieved that the DOL did not currently propose any changes to the duties test. Initial reports suggested that the DOL might include a proposal that workers be required to allocate a specific portion of their time to certain administrative duties to qualify for the exemption. Instead, businesses still have the flexibility to instruct their managers to wear many different hats, so that they fulfill some managerial duties, but can also fill in a non-managerial role, such as by helping with customers or taking inventory.

Conversely, labor advocates are worried that there were no proposed changes to the current duties regulations. Advocates warn that employers can still give an employee a managerial title, but not managerial duties, and get away with working them for long hours and not paying them. They are also concerned that as a result of the increased minimum threshold for overtime, employers will hire more part time workers to replace a single employee eligible for overtime, and cut base pay and benefits to make up the difference in cost for the additional employees. On the other hand, proponents of the regulation think that this could be a good end result, as it will spread the work across those employees who are not given enough hours to make ends meet.

What effect would these proposals impose on the construction industry? In North Carolina, the increased threshold would extend coverage to approximately 160,000 additional workers, which represents roughly 3% of the state’s working population. However, these overtime exemptions only apply to white-collar workers. In fact, non-management employees in construction are not subject to these overtime exemptions even when their salary is above the minimum threshold. ( Moreover, the DOL’s proposals are not set in stone yet. The proposals have to go through a public comment period, after which the DOL will consider and respond to the comments and concerns, and then publish the final regulations. If you would like to view the proposed regulations or submit a written comment, you may do so at:!docketDetail;D=WHD-2015-0001