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Thursday
Jan052012

Mechanics Liens — Smart Tools of Construction Industry Professionals, and Bane of Property Owners

Business Litigation AttorneyConstruction Litigation

by Paul C. Bauducco

(818) 907-3245

 

In 1791, Thomas Jefferson and James Madison proposed the first mechanics liens legislation in order to promote development in Washington.

The Maryland Assembly (which governed Washington at that time) passed the proposed legislation. Since then, all 50 states have enacted mechanics lien legislation to encourage development and protect those involved in the construction industry, according to John G. Cameron’s “A Practitioner’s Guide to Construction Law.”

Mechanics liens” encourage “mechanics,” which include members of the construction industry as well as those providing materials and labor in construction, to engage in construction projects by giving them a process to secure payment for the labor and materials they provide to a project. This security allows homeowners and smaller companies to hire contractors who might not otherwise be willing to take on smaller projects.

In today’s economy, mechanics liens can be an essential collection tool for contractors and material providers in construction projects, allowing them to look to the property for payment if the general contractor or owner fails to pay for work and materials going into the property. They provide a bit of insurance for contractors and sub-contractors.

Conversely, mechanics’ liens can pose a real problem for property owners who pay their general contractors without receiving proper lien releases. If the general contractor fails to pay subcontractors or material providers sums they are owed out of an owner’s payment, the subcontractors and material providers may lien the owner’s property, forcing him to pay for the labor and materials twice.

Mechanics liens laws are strictly enforced and contractors and material providers must give timely and proper notice of their claims and file their liens and enforcements actions within the time frames specified by the applicable statute. If they fail to do so, they may waive their mechanics lien rights and be left without recourse against the property. Whether you are a property owner, contractor or material provider, there are some important things to know about recording and enforcing mechanics’ liens.

California Real Estate Law Regarding Mechanics Liens –
A Three Step Process

 

Contractors, subcontractors and suppliers must take the following three steps to ensure the proper filing of a mechanics’ lien:

1. Serve a Preliminary 20-Day Notice – Workers and suppliers must serve notice of services rendered or supplies delivered within 20 days after making improvements or delivering materials. The notice should be served to the:

▪ Property Owner
▪ General Contractor
▪ Lender or Financier

Contractors or suppliers who work directly with the property owner do not need to serve notice, since the purpose is to ensure the property owner knows who is working on the improvements or supplying the project if these subcontractors are working through a general contractor.

2. Record the Mechanics’ Lien – Claimants should record their liens within the county or counties in which the property is located within 90 days of:

▪ Completion of Work
▪ Excusal of Work (because of breach of contract by the property owner or the general contractor)
▪ Occupation and use of work of improvement by owner or agent
▪ Communicated acceptance of work of improvement by owner or agent
▪ Cessation of Labor for 60 days
▪ The Filing of a 30 Day Valid Notice of Completion or Cessation by the Property Owner (a general contractor has 60 days).

3. Enforce the Mechanics’ Lien – Here’s another deadline notice. A foreclosure suit must be filed within 90 days of the recordation of the lien, in the county or counties where the property is located. If a foreclosure suit isn’t filed in that time frame, the mechanics’ lien is voided.

Avoiding Construction Litigation Involving Mechanics Liens

 

It would be best for all parties concerned if mechanics’ liens and foreclosure suits aren’t filed at all. To avoid these situations, property owners should hire, and subcontractors should work with, properly qualified and licensed general contractors.

Both sides should keep track of the 20 Day Preliminary Notices served.

Finally, property owners and subcontractors should make sure proper payment procedures are in place which also provide waivers and releases of financial obligations when payments are made.

Paul C. Bauducco is a Los Angeles business litigation lawyer whose practice focus is on real estate and construction litigation. You can reach him via e-mail if you need more information: pbauducco@lewitthackman.com

 

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Apr282011

Top 10 Management Mishaps

Lawyer for EmployerWage and Hour Defense

 

by Nicole Kamm
818.907.3235

 

Editor's Note:  This list by Los Angeles Employment Lawyer Nicole Kamm was initially posted on the blogsite TheHiveMarketing.com on April 18, 2011. Please visit The Hive Marketing if you would like to read this post in its original format. 

 

Today's economy makes managing employees much more difficult. There's increased pressure to do more with less -- and in many cases, a lot less.  Mistakes inevitably occur. But you can sidestep some of these pitfalls if you know what to watch for.

Here are the Top 10 Management Mishaps to avoid so you can take steps to stay compliant with California employment laws, and hopefully safeguard your company against potential claims:

 

1.  E-mail Hazards - Watch What You Write

 

Hazard #1A more senior employee e-mails you that after 25 years with the Company, he is considering retirement.  You reply that it is about time he retire and attach information about Social Security and MediCare benefits.

Hazard #2:  You and an employee argue or disagree, which prompts you to vent by sending some particularly nasty comments about the employee to another supervisor. 

Hazard #3:  While checking your personal e-mail account, you watch a hilarious YouTube video full of offensive language. . .which you forward to a coworker you know will love it.

Recommendation

Cases in litigation are often made or broken by e-mails. Common e-mail mistakes include:

▪  Thinking e-mails are deleted after pressing the delete button.

▪  Believing e-mails are confidential if written only to internal management.

▪  Viewing e-mails as a conversation instead of a formal letter.

Don't hit the "Send" button until you visualize your e-mail as a 3’x4’ poster read aloud by opposing counsel in front of a 12-person jury.  This exercise helps you avoid some of the most common e-mail mistakes.

 

2.   Document Everything! (Even Verbal Warnings)

 

Remember: “If it is not in writing, it didn’t happen.”

As a Los Angeles employment lawyer, my mantra is “document, document, document.” 

As a human resources or management executive, you can help cover your bases with notes to the file, letters to the employee, memos to general staff, e-mails to management personnel, minutes of management meetings, etc. 

Everything that happens in the workplace that may be employee claim-related should be documented. And this definitely includes in-person meetings and verbal warnings.

 

3.   Improper or Incomplete Documentation - Be Detailed

 

 

Remember: “If it’s not documented well, better that it not be documented at all.”

Incorrect or incomplete documentation weakens even the strongest case.  As an employer, you should review all documentation and consider consulting an employment attorney before finalizing any writing.

 

4.  Reviews and Terminations - Say What You Mean

 

Sometimes human resources or management can “sugar coat” reviews and employee termination notices.  This could turn sour if the employee is angry and inclined to sue. 

Avoid telling the employee, “Your layoff has nothing to do with your performance." If  the employee takes you to court, it's hard to make a case for poor performance when you sugarcoat. 

Employees in litigation commonly use positive performance reviews when terminated in an effort to demonstrate they were good performers and the reasons they were given for termination were “pretextual,”  defined as “a fictitious reason that is concocted in order to conceal the real reason.” Examples of pretextual reasons include termination:

▪  Due to a work-related injury,

▪  For lodging a complaint (e.g., harassment, discrimination), or

▪  For excessive absences related to “protected activities” (e.g., disability, jury duty, witness duty).

Recommendation: 

Plan what you are going to communicate before saying or writing it.  Be honest and concise.  Explain the reasons behind the review or termination, but don’t be defensive or argue.  Remember, a single review or termination may be the linchpin for a future claim.

 

5.  Employee Complaints - Never Ignore Them

 

As a supervisor, you must notify HR or upper management immediately when you learn of potentially unlawful conduct.  Legally speaking, once a supervisor is aware of harmful or illegal conduct, the company is deemed to be on notice.

As a business owner or HR executive, you must promptly conduct an investigation when certain complaints arise (e.g., harassment, discrimination, etc.) or potentially illegal conduct is reported.  Employers are under a legal obligation to conduct investigations in these situations.

And investigations are essential to managing the workplace and resolving disputes before lawsuits arise.  You'll want to protect yourself as properly conducted investigations often lead to an important defense after a lawsuit is filed. 

Here are some basic tips for conducting investigations:

▪  Interview both the complainant and alleged perpetrator.

▪  Interview additional witnesses.

▪  Gather additional evidence.

▪  Document every step.

▪  Evaluate and conclude, based on the facts.

▪  Assess and address (if necessary) the future impact of the complaint on the workplace environment.

 

6.  “Off the Clock” Work - Pay Now or Pay Later

 

You must keep track of all hours worked by non-exempt employees.  Record the stop and start time of all work being performed, including the beginning and ending of each meal period.  You'll need to pay for all work being performed by employees (including any “off the clock” work).

Employees often accuse supervisors of pressuring employees to work “off the clock," or of “shaving” time records in an effort to reduce costs and increase bonuses for themselves.  And sometimes managers make honest mistakes, but mistakes don't preclude potential lawsuits.

Example: Employee forgets to clock in or out and manager makes correction on time card.

Recommendation: 

Have your employee initial the change to acknowledge that the corrected time accurately reflects the time worked.

 

7.  Meal and Rest Break Periods - Enforce Them

 

Meal Break Rules:

▪  As an employer, you're required to provide a 30-minute unpaid, duty-free meal break for each work period of more than 5 hours under California law.  However, you and your employee may waive the meal period by mutual consent IF the total work period is no more than 6 hours. 

▪  A second meal period of not less than 30 minutes is required if an employee works more than 10 hours per day.  But if the total hours worked is no more than 12 hours, you and your employee may waive this second period by mutual consent -- but only if the first meal period was not waived.

▪  Employees must be relieved of all duty during their 30-minute meal period.  “On duty" meal periods are permitted only when (i) the nature of the work prevents an employee from being relieved of all duty, and (ii) agreed to in writing by you the employer and your employee. 

The penalty for failing to provide a meal period is one additional hour of pay for each workday the meal period is not provided.

Recommendation

You should make sure employees are provided meal breaks and that records reflect meal breaks. Make sure the breaks are taken (i.e., require employees to clock out and in for the full 30-minute break).

 

Rest Break Rules 

▪  As an employer, you must “authorize and permit” your non-exempt employees to take 10-minute rest breaks every four hours. 

▪  However, no rest break is required for employees whose total daily work time is less than 3.5 hours.  Rest breaks should be taken in the middle of each work period, if possible.  You cannot allow your employees to combine rest breaks with meal breaks or use them to come in late or leave early.

▪  Rest periods are counted as time worked, therefore you must pay your employees for this time.  The penalty for failing to provide a rest period is one additional hour of pay for each workday the rest period is not provided.

Recommendation:

Do not deny employees the ability to take 10-minute rest breaks.

 

8.  Enforce Overtime Rules & Pay for Overtime

 

In California, you must provide time-and-one-half the employee’s regular rate of pay for:

 ▪  All hours worked beyond eight in a single workday (or 40 in a workweek), and

 ▪  The first eight hours worked on the seventh consecutive day worked in a single workweek. 

Employers must pay double the employee’s regular rate of pay for:

▪  All hours worked beyond 12 in a single workday, and

▪  The hours worked beyond eight on the seventh consecutive day worked in a single workweek.

California employers my delay payment of overtime wages earned in a pay period no later than the payday for the next pay period. 

If delaying to the following pay period is unavoidable, you must itemize the hours as corrections on the pay stub for the period in which they are paid and identify the date of the pay period to which they are attributable.

A California employer's failure to pay overtime results not only in an obligation to pay the overtime owed, but the failure may also subject you to other penalties under the Labor Code.

 

9.  Leave Rules - Know Them

 

The state requires certain leaves by law, while others are optional.  To make it more confusing, some leaves apply only to companies employing certain numbers of people. 

For example, Pregnancy Disability Leave (PDL) applies to employers with five or more employees whereas the federal Family and Medical Leave Act (FMLA) and state California Family Rights Act (CFRA) only apply to employers with 50 or more employees. 

All employers (even those with only one employee) must provide workers’ compensation disability leave and jury and witness duty leave.  Yet, no employer is required to provide paid vacation or sick leave.

Because the different types of leaves, both required and not, interact with each other in different ways, it is important to understand the various laws and corresponding obligations.

 

10.   “Protected” Activities - Don't Write Up or Terminate Employees for These

 

California law lists a long roster of activities that you cannot cite as grounds for employee termination.  Nor should employees be written up for these reasons.  Some of these include: 

▪  disclosing wages

▪  political activity

▪  limited time off for a child’s school or day care activities

▪  refusing to take polygraph test

These are the top 10 reasons employers leave themselves open to potential legal battles, but they are not all of the reasons. If you feel you need help understanding California's employment laws, you should seek legal counsel. A good Los Angeles employment lawyer can help you navigate the complicated territories of hiring and firing practices, carrying out proper leave and break policies and more. 

Nicole Kamm, Esq. is an Employment Lawyer who represents clients in all aspects of employment law, from counsel to litigation.  For more information, contact Ms. Kamm at (818) 990-2120.

 

 
Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

 

 

LEWITT HACKMAN | 16633 Ventura Boulevard, Eleventh Floor, Encino, California 91436-1865 | 818.990.2120