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ACCNJ LEGAL & INSURANCE UPDATE OCTOBER 2024 |
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U.S. SUPREME COURT DECISION PUTS AN END TO “CHEVRON DEFERENCE”
On June 28, 2024, the U.S. Supreme Court issued a ruling (Loper Bright Enterprises v. Raimondo) that ended the 40-year-old precedent of "Chevron deference," which required courts to defer to federal agency regulations if the language of a statute at issue was ambiguous and the agency's interpretation was "reasonable." Now, instead of deferring to agencies' expertise in interpreting ambiguous language in laws pertaining to their work, federal judges will have the power to exercise independent judgment in interpreting statutes and reviewing the agency's interpretation of the law. In other words, judges will now be able to expand their role into the realm of policymaking.
While the construction industry typically operates within the parameters of state and local laws, the Chevron doctrine has played a substantial role in shaping it, as contractors are subject to a number of federal laws, including Occupational Safety and Health Administration regulations. The recent Supreme Court decision is expected to empower regulated entities, and, in turn, the construction industry may begin to see more successful legal challenges to agency directives wherein contractors assert that an agency has not properly interpreted or applied Congressional intent, particularly in the application of Davis-Bacon and other similar statutory requirements implemented via regulation.
Accordingly, the post-Chevron landscape will foster a new level of regulatory uncertainty, as the true impact of this decision will be determined by years of litigation, with courts and agencies grappling with its practical implications. With this new avenue opening up for employers seeking to challenge federal regulations, ACCNJ staff will continue monitoring for updates and alert members of potential developments. |
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CORPORATE TRANSPARENCY ACT
On January 1, 2024, the Corporate Transparency Act (“CTA”) went into effect, which aims to prevent and combat money laundering, corruption, and tax fraud by requiring certain entities that meet the definition of “reporting companies” to electronically file beneficial ownership information ("BOI") forms with the Financial Crimes Enforcement Network. The BOI forms are used to identify the reporting company’s beneficial owners, defined as individuals who either directly or indirectly: (1) exercise "substantial control" over the entity or (2) own or control at least 25% of the entity's ownership interests.
Reporting companies created before January 1, 2024, will have until December 31, 2024, to file their initial BOI Report, while reporting companies formed during 2024 will have 90 days from their date of formation. However, it is important to note that there is a list of entities (23 total) that are exempt from the BOI reporting requirements, most notably large operating companies. To qualify as a large operating company, an entity must meet all three of the following criteria: (1) employ more than 20 full-time employees in the U.S. (generally working at least 30 service hours per week); (2) have an operating presence at a physical address in the United States; and (3) have filed a federal tax return for the previous year showing more than $5,000,000 of gross receipts.
With the filing deadline looming, construction companies are responsible for conducting a proper analysis to determine whether they are subject to the CTA or qualify for an exemption. To analyze their specific situation, contractors may want to consult with a professional knowledgeable about the CTA’s requirements and its impact on the construction industry, as penalties for non-compliance are alarming. |
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AGC CHALLENGES OSHA’S WALK AROUND RULE
On May 31, 2024, the U.S. Occupational Safety and Health Administration’s (“OSHA”) final rule went into effect, allowing employees to designate a non-employee third party as their representative during an OSHA inspection. OSHA remains optimistic that its final rule will increase worker representation and transparency, however, construction industry members have strongly opposed these changes, specifically, allowing non-employee third-party representatives, including activists or competitors, to access employer worksites during inspections.
Accordingly, the AGC, the U.S. Chamber of Commerce, and other business groups filed a lawsuit in the Western District of Texas, arguing that allowing third parties to enter worksites during inspections goes beyond what Congress intended when it passed the law that governs workplace safety. Further, the AGC highlighted concerns over the need for a formal process for selecting employee representatives, unclear guidelines on verifying third-party qualifications, risks to workplace confidentiality, and increased costs and liability concerns where unqualified individuals could gain access. In response, OSHA recently issued new guidance which clarified that a non-employee representative must be reasonably necessary to aid in an inspection due to their relevant knowledge, skills, or experience, including experience with hazards or conditions in the workplace or similar workplaces, or language or communication skills.
The court will hear the case later this year, as the AGC remains committed to opposing non-employee third-party representative participation in OSHA inspections. ACCNJ staff will monitor for updates and update membership accordingly. |
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DIRTY DIRT DISCUSSION
ACCNJ staff recently began reviewing existing legislation regarding whether contractors or public owners are responsible for removing and disposing of displaced contaminated soil on a project. These efforts come on the heels of an inquiry in which staff was tasked with researching whether contract documents can shift the responsibility of removing and disposing of displaced-contaminated soil to contractors (particularly utility contractors) after submitting their bids. ACCNJ has consulted and is working with counsel to determine what can be done to protect contractors from incurring these additional costs, including potential legislative fixes. |
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Associated Construction Contractors of New Jersey |