On Wednesday, January 14, 2015, the Virginia General Assembly convened its 2015 Regular Session. Although the odd year Regular Sessions are scheduled to last only 30 days, the General Assembly has the option to extend the short session by up to 30 days. This year the General Assembly has exercised that option and it plans to adjourn the 2015 Regular Session on Saturday, February 28, 2015, with “Cross-over day” scheduled for February 11, 2015. The reconvened session is scheduled for April 15, 2015.
Below are a list of the bills that may impact the construction industry that we are following.
HB 1512: Delegate Simon offered this bill that would increase the minimum wage from the federally mandated $7.25 per hour to $15.15 per hour, effective July 1, 2015. I’ll let that sink in for a minute. That is a proposed 109% increase in the minimum wage. This bill was referred to the Committee on Commerce and Labor. We expect this bill will fail in committee considering the Senate Committee on Commerce and Labor has already passed by SB 681 and SB 706, both of which proposed much smaller increases in the minimum wage.
HB1540: Delegate Albo is the patron of this bill concerning proposed modifications to the Virginia Public Procurement Act. Specifically, this bill proposes increases to the contract amounts for job order contracting and otherwise modifies and limits the use of job order contracting. This bill was referred to the Committee on General Laws, and assigned to Subcommittee #2. Delegate Minchew (HB 1637) and Delegate Gilbert (HB 1835) have offered similar bills that are also in Committee on General Laws, Subcommittee #2.
HB 1608: Delegate Davis offered this bill. This bill would preempt municipalities from setting their own wage and/or benefit floors for public contracts. The bill prohibits local government bodies from establishing provisions in contracts for procurement of goods, professional services, or construction services, that would require a wage floor, or any other employee benefits or compensation above what is otherwise required by state or federal law. This bill was referred to the Committee on Commerce and Labor.
HB 1628: Delegate Albo is the patron of this bill intended to address the fall-out from the Fourth Circuit’s 2014 opinion in the never ending saga that is Carnell Construction Corporation v. Danville Redevelopment & Housing Authority. We have previously written about the Fourth Circuit’s most recent (March 6, 2014) opinion in the Carnell case, specifically the Fourth Circuit’s affirmation of the District Court’s application of VA Code 2.2-4309 to reduce Carnell’s damages for unpaid work. VA 2.2-4309 prohibits a contractor from recovering for change order work in excess of $50,000 or 25% of the original contract amount (whichever is greater) unless there is “advance written approval of the Governor or his designee, in the case of state agencies, or the governing body, in the case of political subdivisions.” The Fourth Circuit’s opinion creates a conundrum for a contractor that is asked to perform additional work with a value in excess of the cap in VA Code 2.2-4309, but without the requisite advance approval; either (a) refuse to perform the work and face termination for breach of the contract, or (b) perform the work with the high likelihood that the contractor will not recover compensation for this work. This bill is intended to provide contractors in this position the opportunity to assert a claim for such extra work. This bill was referred to the Committee on General Laws, and assigned to Subcommittee #2.
SB 863: Senator Chafin offered this bill that would change the Virginia Public Procurement Act (VA Code 2.2-4303) to clarify that the small purchase procedures for purchases under $100,000 may be used to procure construction services. This bill was referred to the Committee on General Laws and Technology.
SB 885: Senator Petersen is the patron of this bill that would change the definition of a “small business” for procurement purposes. At present, the Virginia code (2.2-1604 and 2.2-4310) defines a “small business” as a business that “has 250 or fewer employees, or annual gross receipts of $10 million or less averaged over the previous three years.” SB 885 would substitute an “and” for the “or” to define a “small business” as one that has 250 or fewer employees and annual gross receipts of $10 million or less averaged over the previous three years. This small change would significantly reduce the number of businesses that would meet the new definition of “small business.” This bill was referred to the Committee on General Laws and Technology.
SB 891: Senator Petersen is also the patron of this bill. This bill proposes the addition of language to VA Code 43-3(C) that would require that a Subcontractor cannot waive or release its lien rights, bond claims, claims for additional costs, or any other rights “unless the subcontractor has been compensation for the work or materials related the waiver.” The proposed change spurs a number of questions. Why only Subcontractors? “Subcontractor” is a defined term in Title 43. Why not General Contractors? Why not Sub-subcontractors? Can a sophisticated Owner or Prime Contractor (with skilled Counsel) contract around this proposed language? How will lenders and title insurance companies respond to this bill?
We will continue to follow the Virginia General Assembly’s 2015 Regular Session and provide updates as these bills (and others) make their way through the legislative process.
