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Andrews Myers Monthly Law Alert

 

AM MONTHLY LAW ALERT
July 2017
 

EMPLOYMENT                                                                    
Overtime Rule May Never Become Effective
By Tony Stergio 

Many of you may remember that last year the Obama Administration attempted to raise the minimum salary level needed for employees to qualify as exempt (non-overtime) employees under the FLSA’s white-collar exemptions (executive, professional, and administrative).  This forced many employers to begin treating formerly exempt employees as hourly, overtime-eligible employees, or to raise exempt employees’ salaries.

In November of last year, a Federal District Court blocked this salary rule from going into effect just days before its enforcement date.  Now, the Trump Administration has announced it will no longer defend the Obama-era salary hike regulation in court.  This means the present salary levels for exempt white-collar employees under the FLSA are not likely increasing any time soon.  If anything changes on this, we will keep you posted.


CONSTRUCTION                                                                   
Fire Alarm Inspection Issues Delay Houston Projects
By Ben Westcott

In the past, both fire alarm and fire sprinkler contractors have been able to purchase a four hour City of Houston after-hours test and inspection permit. Subsequently, the fire marshals who volunteered to perform these after-hours inspections were paid for four hours of overtime by the City of Houston.

Just recently, without warning to the construction industry, Mayor Turner informed the Fire Department that its inspectors would only be paid for the actual time spent on the project, instead of the entire four hours.  Not surprisingly, the Fire Department reacted by canceling all overtime inspections since very few, if any, inspectors were willing to work after hours without a guaranteed four hours of compensation.  

Most of the fire alarm and fire sprinkler inspections for tenant improvement work in existing buildings are done after normal working hours to reduce tenant disruption.  If the rules are not changed, inspections will now have to occur during normal business hours. This abrupt change has put many construction schedules in serious trouble.  The current lead time is 3 plus weeks or more for a regular hours inspection with the Fire Department.   

AIA A201 2017 13.5 provides a potential basis for relief for contractors facing this problem (“The Owner shall bear costs of…inspections…that do not become requirements until after bids are received or negotiations concluded”).  Here, the requirement to hold inspections only during business hours was not a requirement until after the Projects were bid.  Contractors should also submit notice of a claim for additional cost and additional time under Article 15.1.  Lastly, prudent contractors may also decide to list this inspection variable in their assumptions and clarifications going forward to put owners on notice of the potential for delays.  

Texas Senate Bill SB807 - On September 1, 2017, SB 807, a construction related bill which was crafted by Ben Westcott, in his capacity as Legislative Liaison to the State Bar of Texas Construction Law Section, will go into effect.  SB 807 insures that Texas construction project disputes, including disputes involving architects and engineers and other project participants, can be resolved in Texas courts under Texas law.   Texas Business & Commerce Code 272 has long given Texas general contractors and subcontractors the right to void a contract provision attempting to require suits be brought in other states or under the laws of other states.  Under SB 807, the same rules now apply to all project participants.  


COMMERCIAL REAL ESTATE                                            
The More You Know (Or Don't)
By Josh Harrison

The Texas Supreme Court has recently ruled on whether “knowledge is power” or “ignorance is bliss,” at least when it comes to purchasing real property.

As most are aware, when you purchase real property in Texas, you purchase it subject to anything that is recorded in the real property records with regard to that property.  For example, if there is an easement across your property that is recorded in the real property records, you cannot act like you didn’t know about it and pretend it’s not there, even if you didn’t actually know about it.  If something has been recorded in the county’s real property records, then you are deemed to have “constructive” knowledge about it, whether you “actually” know about it or not.  In this sense, “knowledge is power,” and a good real estate attorney and other real estate professionals can help to empower you with such knowledge. Read more...

CORPORATE                                                                       
Which Entity Type is Right for Your New Business?
By Champe Fitzhugh

Choosing the right business type is an important early step in starting a new business.  This decision has tax, liability, and operational repercussions, and should be made after careful consideration and consultation with legal and tax advisors.  In most cases, the three most commonly considered private business entity types are the limited liability company (“LLC”), the C-Corporation (“C-Corp”), and the S-Corporation (“S-Corp”), all of which are created by a state level registration, provide protection to the company name and identity, and limit owner liability for business debts and obligations.
 
One obvious starting place for distinguishing the three is that LLCs are owned by members, who may either manage the business themselves or choose managers (who may be members but do not have to be) to do so for them, while both C-Corps and S-Corps issue stock and are owned by shareholders, who usually (except where different classes of stock are created in a C-Corp, some without voting rights) vote to elect directors to manage the corporation.  There are federal tax differences between C-Corps and S-Corps, which will be addressed later. Read more...
LEGISLATIVE UPDATES                                                           
Texas Senate Bill SB807
 
On September 1, 2017, SB 807, a construction related bill which was crafted by Ben Westcott in his capacity as Legislative Liaison to the State Bar of Texas Construction Law Section, will go into effect.  SB 807 insures that Texas construction project disputes, including disputes involving architects and engineers and other project participants, can be resolved in Texas courts under Texas law. Texas Business & Commerce Code 272 has long given Texas general contractors and subcontractors the right to void a contract provision attempting to require suits be brought in other states or under the laws of other states. Under SB 807, the same rules now apply to all project participants.  

FIRM CELEBRATIONS                                                             
Congratulations Are in Order
 
Susan George was recently elected as a Council Member in the Houston Bar Association's Real Estate Section for the 2017-2019 term.

Andy Harris was recently elected to the Austin Bar Association's Construction Law Section as a Section Board Member for the 2017-2018 term.

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