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We Mean Business in Texas
Construction
Construction Law Update: Texas Legislature 87th Regular Session
by Ben Westcott & Patrick Kelly The Texas Legislature recently gaveled out of its 87th Regular Session and it was a boon for contractors in Texas. While a number of laws were enacted that will change requirements for public jobs, increase protections for contractors, and change lien laws, two drastic changes stand out.

First, contractors are no longer liable for design defects.
  • In a drastic shift away from the draconian effects of Lonergan and its progeny, contractors are now not responsible for the consequences of design defects in, and may not warrant the sufficiency of, plans, specifications, or other design documents that are provided to the contractor.
  • Contractors are now only responsible for promptly disclosing, in writing, known or discoverable defects in those plans.
Second, the statute of repose on public works projects has been shortened to 8 years.
  • Public building owners can now only sue for defects within 8 years instead of 10 years.
  • However, building owners now have an additional year (instead of an additional two years) to sue for defects discovered in year 8, if the proper written notice is sent.
Several Andrews Myers’ attorneys, including Ben Westcott, Carson Fisk and Clayton Utkov were active in helping shape and testifying in favor of multiple bills impacting the construction industry.
 
For a full summary of bills impacting the construction industry, click here.

 
Protecting Your Company from Material Delays
by Clayton Utkov As stated in our April Law Alert, the pandemic caused a substantial strain on the global supply of construction materials. There was a complete or partial shutdown of numerous plants and dramatically limited shipping options. In addition, the AGC reports the loss of power and water resulting from the February 2021 freeze further disrupted production by the plants providing construction materials. This disruption of the input for construction plastics affected everything from adhesives, to roofing materials, to PVC pipe and plumbing fixtures, while at the same time the freeze increased the demand for the same materials. Suspension of production at other plants impacted the supply of cement and steel, among other things.

In addition to these production delays, various sources of interference in the shipping markets continue to cause material shortages. The trouble in the shipping markets began with the pandemic but it did not end there. A lack of available containers, ship space, and port availability continues to disrupt intermodal shipping. Labor shortages, closure of a portion of the Mississippi River, blockage of the Suez Canal, tariffs, and increasing diesel costs share the blame for the further unpredictability of the shipping markets over recent months.

Whether resulting from production issues or shipping problems, material delays can delay the completion of a project, resulting in substantial additional expense—potentially far exceeding the cost of the material cost escalation. As such, prudent contractors will seek to avoid, if possible, or mitigate these risks and damages. Read More...
Employment
Executive Order Concerning Non-Competes Strictly a Suggestion, For Now
by Chuck Jeremiah As part of a larger push to “promote competition in the American economy,” on July 9, 2021, President Biden signed an executive order which, in part, encourages the Federal Trade Commission (“FTC”), the enforcer of federal antitrust law, to ban or limit employee noncompetition (“non-compete”) agreements. 

The non-compete serves as a mechanism to protect the employer’s interest in its confidential, proprietary data shared with the employee, and its need to prevent such data from being used by the employee and others to unfairly compete. A typical non-compete restricts an employee, after his/her separation of employment, from working for a competitor or otherwise competing with their former employer. They are for a set duration and normally limited in geographic or other scope.

To be clear, President Biden’s executive order does not itself prohibit or limit non-competes. It is an instruction to the FTC to consider taking action as a regulatory body. It is not entirely clear whether the FTC has the authority to ban or limit non-competes, traditionally the province of state law, and there is bound to be pushback on any major regulation. It is quite possible that in the near future the FTC will take some steps to limit the use of non-competes. Read More...

 
DOJ Says Federal Law Does not Bar Mandating of COVID Vaccines
by Tony Stergio The Justice Department, earlier this week, released an opinion that the Federal Food, Drug, and Cosmetic Act does not prevent private businesses or public agencies from mandating COVID vaccines for their employees. This opinion comes two months after the Equal Employment Opportunity Commission released a guidance establishing that U.S. employers could require their employees to get the vaccine.

The EEOC, however, did not address the fact that the COVID vaccines had only received Emergency Use Authorizations (“EUA”) which could create a legal issue for employers. This question has kept some businesses from mandating the shots. This recent opinion from the Justice Department squarely addressed this issue.

Section 564 of the Food, Drug, and Cosmetic Act sets out “required conditions,” for the emergency use of a vaccine/product. Section 564(e)(1)(A)(ii)(III) features the condition posing the most concerns, stating “individuals to whom the product is administered [must be] informed … of the option to accept or refuse administration of the product.” The Justice Department, however, concluded that this section only concerns the provision of information to potential vaccine recipients and does not prohibit public or private entities from imposing vaccination requirements for vaccines that are subject to EUAs. Read More...


Filing Deadline Extended for EEO-1 Reports
by Tony Stergio The Equal Employment Opportunity Commission has announced it is extending its deadline for filing EEO-1 reports for 2019 and 2020 until August 23, 2021. All employers with 100 or more employees must file an EEO-1. Additionally, all employers with 50 or more employees and a federal contract or subcontract with more than $50,000 must file an EEO-1.


Texas Legislature Expands Sexual Harassment Claims
by Tony Stergio Effective September 1, 2021, any Texas employer that employs “one or more employees” can be sued for sexual harassment. Previously, only employers with 15 or more employees could be subject to such claims.  Also new in September, supervisors, co-workers, or other individuals associated with employers may be named as individual defendants in Texas sexual harassment claims.

Not only will those subject to sexual harassment claims in Texas expand, there will also be heightened scrutiny on employer conduct relating to sexual harassment. The new Texas law provides that an unlawful employment practice occurs if there is sexual harassment and an employer or its agents know, or should have known, that the conduct was occurring and failed to take immediate and appropriate corrective action. “Immediate and appropriate corrective action” is not defined by the statute and therefore its meaning will likely have to be determined, over time, in the State Courts.

Finally, as of September 1, 2021, claimants will have more time to bring sexual harassment claims in Texas. The statute of limitations for making claims of sexual harassment will expand from 180 days to 300 days from the date of the alleged harassment. The additional time for filing claims only applies to sexual harassment claims. It does not affect the 180-day deadline for filing of other discrimination claims.


Double Damages Revived by DOL
by Tony Stergio The Department of Labor’s Wage and Hour Division (WHD) issued Field Assistance Bulletin No. 2021-2, revoking a Trump administration policy that downplayed the use of liquidated damages for Fair Labor Standards Act (FLSA) violations in settlement discussions with the DOL.
 
Prior to the Trump administration, it had been the policy of WHD to seek liquidated damages in certain cases. This policy was changed on June 23, 2020, when the DOL announced that it would no longer be seeking pre-litigation liquidated damages except in cases where there was “clear evidence” of bad faith or a history of violations by the employer. With the issuance of this new Field Assistance Bulletin, the WHD will return to pursuing liquidated damages from employers in its pre-litigation investigations if the DOL’s Regional Solicitor concurs with the liquidated damages request.

According to Field Assistance Bulletin, “Liquidated damages shall not be assessed by WHD where the employer has set forth credible evidence of a good faith defense,” or the where the Regional Solicitor “deems the matter inappropriate for litigation.”
Best of the Best in Houston

Andrews Myers was named the Best of the Best Employment Law Firm in Houston by the Houston Chronicle. With more than 240,000 votes ringing up across Houston and the state during the three rounds of voting, we started with a field of 124,000 nominees. Voters narrowed the field again to 504 of the best of the best across Houston and surrounding cities.

Real Estate
The State of Commercial Real Estate - Retail
by Mahek Bhojani Andrews Myers sponsored the Houston Business Journal’s (HBJ) webinar on The State of Commercial Real Estate – Retail on July 22, 2021. The guest speaker was Anjee Solanki, National Retail Director for Colliers. Ms. Solanki provided insight into the recent trends in the retail market in light of the COVID-19 pandemic. She also forecasted what the industry can expect for the future of retail real estate.

Key takeaways from the webinar:
  • The U.S. Retail Market saw a total retail year-over-year growth by about 20%, with foodservice, gas stations, and automotive seeing the most growth.
  • E-commerce sales hit a record of 16% of total retail sales in Q2 of 2020, though it will likely cut back. Statistics show that only 13% of total retail sales in Q1 of 2021 were conducted online.
  • As for where consumers shop, the urban market has seen the most change in physical retail spend in 2020 with a drop of approximately 7.4%. Comparatively, the suburban market saw a 1.7% drop in physical retail spend in 2020. Ms. Solanki noted that the suburban market has become quite competitive and remarked that government assistance and landlord cooperation mitigated an entire collapse of this market. Read more...
Litigation

New Changes in LLC Litigation and Recovery of Legal Fees

by Andy Harris  In Texas, courts presume that each party will pay for their respective legal fees unless a contract or statute allows for the recovery of legal fees to the prevailing party. Many of our business and construction clients are forced to litigate breach of contract claims on occasion. The simplest method to ensure legal fees can be recovered by a successful party in a breach of contract action is to explicitly state so in the contract. If not stated in the contract, Texas Civil Practice & Remedies Code § 38.001 allows for the recovery of reasonable attorneys’ fees in a breach of contract action. However, the statute as currently drafted allows for this recovery “from an individual or corporation” only.

Courts have considered whether a partnership or LLC falls within the “individual or corporation” definition. Over the past few years, many Texas courts have determined that the legislature could have clearly specified that it applied to LLCs or partnerships and chose to omit those entities. Therefore, Section 38.001 does not allow for recovery of legal fees when successfully suing a partnership or LLC under a breach of contract theory. In other words, a plaintiff could recover its legal fees if it successfully sued “Defendant, Inc.” but not “Defendant, LLC” or “Defendant, LP.” LLCs and partnerships effectively had a loophole to avoid an award of attorneys’ fees against them even when the other party prevailed at trial.
 
To close this loophole, on June 15, 2021, Governor Abbott signed House Bill 1578 into law. Effective September 1, 2021, the current law is modified to allow for recovery of attorneys’ fees in breach of contract claims against all “organizations” as defined by the Texas Business Organizations Code. Tex. Civ. Prac. & Rem. Code § 38.001. This definition includes LLCs, partnerships, and virtually all other entity structures. In other words, the loophole closes on September 1st. Read More...
About Andrews Myers
Where to find Andrews Myers
07/28 - CREMM Influencer Marketing Panel 
07/29 - TBB Legislative Update and Summer Gathering
08/03 - Gulf Coast Symposium on HR Issues w/ Chuck Jeremiah
08/03 - AGC of Texas Membership Luncheon in Austin
08/04 - SPONSOR AGC Austin Top Golf
08/09 - SPONSOR AGC Houston CLC Golf Tournament
08/10 - ABC Greater Houston Industry Influencers Luncheon
08/18 - IREM Active Shooter Webinar with Legislative Intro from Bret Rycroft & Matt Cire
08/19 - SPONSOR AGC Houston Membership Mixer
08/24 - IRMI Energy Risk & Insurance Conference w/ Chuck Jeremiah
08/24 - AGC Houston Area Monthly Luncheon
08/25 - CFMA 2021 Economic Update & 35th Anniversary Event
09/01 - SPONSOR ABC Central Texas PAC Dove Hunt
Andrews Myers, PC
Founded in 1990, with offices in Houston and Austin, Andrews Myers, Attorneys at Law, is a corporate law firm and recognized market leader in Texas construction law.  The firm focuses on the concentrated disciplines of commercial litigation, construction, commercial real estate, corporate and business transactions, with additional emphasis on related issues including bankruptcy and insolvency, energy, employment and capital formation. A seasoned team of attorneys provides timely and cost-effective solutions to the most complex problems facing entrepreneurs and middle-market industry leaders throughout the state and the nation. For more information please visit www.andrewsmyers.com.
COVID-19 Updates
Andrews Myers attorneys have been tracking and updating the many changes that could effect you and your business throughout the ongoing COVID-19 Pandemic. To see all of the articles and information you may have missed, please visit our dedicated COVID-19 page on AndrewsMyers.com

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