Capitol Update – 08/20/2021
Nonresidential construction prices soar 23% year over year
Nonresidential construction input prices are up 23.4% since this time last year, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data released Aug. 12. For July, nonresidential construction input prices increased 0.8% since the month before, ABC said. While softwood lumber saw a 29% dip in prices since last month, the cost of other types of products used in construction has continued to grow. Energy prices have experienced substantial year-over-year price increases, with the price of natural gas up 146.7%, and crude petroleum and unprocessed energy materials prices up 102.9% and 93.8%, respectively. Prices for steel mill products, which increased 10.8% in July alone, are up 108.6% for the year.
July construction starts down in light of cost factors
Residential construction starts dropped 6% in July, and nonresidential starts and nonbuilding starts each dropped 1%, resulting in a 3% decline in total starts, according to Dodge Data & Analytics. Materials costs were a big factor, Chief Economist Richard Branch says, noting “lumber and copper prices have fallen in recent weeks; however, steel, plastic and other construction-related products are continuing their ascent.” Full Story: Dodge Data & Analytics
Nonresidential construction starts eased in July
Nonresidential construction starts fell 3.1% in July compared with June, according to ConstructConnect. Heading the list of big projects are a $2.8 billion offshore wind farm in Massachusetts and a $1 billion FBI building in Huntsville, Ala. Full Story: Daily Commercial News (Ontario)
California ran up a $23 billion tab for unemployment benefits. Who will pay off the debt?
Even with a historic surplus, California lawmakers took their summer break without addressing a looming debt the state owes to the federal government for the unprecedented unemployment benefits it doled out during the COVID-19 pandemic. Jeong Park in the Sacramento Bee
Federal Court in California Greenlights Drug Testing of Job Applicants
A U.S. District Court recently dismissed the lawsuit of a former employee who claimed disability discrimination after he was terminated for testing positive for marijuana in a pre-employment drug test. Espindola v. Wismettac Asian Foods, Inc., Case 2:20-cv-03702 (C.D. Cal. Apr. 28, 2021). The Court held that an employer can condition an offer of employment on passing a pre-employment drug screening, including a test for marijuana (the recreational use of which has been legal in California since 2018). The Court further held that an employer does not have any obligation to engage in the interactive process before terminating an employee under such circumstances.
Here, the employer contacted the employee to schedule a pre-employment drug screening, which the employer required of all prospective employees after they are offered a position and before starting work. The test was postponed until after employment began at the employee’s request. The employee then completed a “personnel information sheet” on which he indicated he was not “disabled,” and he signed a drug testing consent form and disclosed for the first time that he had “chronic back pain” and had been “prescribed” marijuana to treat his condition. Importantly, the employee did not provide any details or documentation to substantiate the nature of his condition or to explain any limitations on his ability to perform his job. The employee forwarded Human Resources his medical marijuana card (which he obtained after he learned of the impending drug test), took the required drug test, and tested positive for marijuana. His employment was then terminated based on the results of the drug test. In response, the employee filed a lawsuit for retaliation and disability discrimination under the California Fair Employment and Housing Act (“FEHA”) as well as claims for wrongful termination, failure to accommodate a disability, and failure to engage in the interactive process.
Judge John W. Holcomb granted the employer’s summary judgment motion and ruled that the employee failed to establish he suffered from a disability given the lack of detail or documentation submitted to the employer. The Court held that chronic back pain “without more” does not qualify as a disability under FEHA and that “an employer does not have to accept an employee’s subjective belief that he is disabled.” Regardless, the employer established a legitimate, nondiscriminatory reason for the employee’s termination (i.e., the failed drug test), and it was under no obligation to engage in the interactive process before the employee passed the test. Relying upon Pilkington Barnes Hind v. Superior Court, 66 Cal. App. 4th 28 (1998), the Court further concluded that the employee could not rely upon his own delay in submitting to the drug test to argue that he was no longer an applicant at the time of the test, thus giving him greater privacy rights as an employee.
Public-private partnerships might prove a welcome alternative for school districts that need to be build facilities but are strapped for cash. A guide from consultant Brailsford & Dunlavey explores the P3 option for schools and what makes it a good candidate. Full Story: Building Design + Construction (free registration)
Divided Supreme Court limits prevailing-wage-for-public-works requirement
Answering questions referred by the Ninth Circuit under rule 8.548 in two separate cases, the Supreme Court today limits the scope of statutes that guarantee a prevailing wage for non-public employees working under contract on “public works.” Both opinions are authored by Justice Carol Corrigan, and Justices Goodwin Liu and Mariano-Florentino Cuéllar dissent in both. In Busker v. Wabtec Corp., the court holds that installing on Metrolink locomotives and train cars components of a communications network designed to prevent collisions and other dangerous train movement does not fall within the statutory definition of “public works,” nor does it become a public work because it is integral to another activity that itself is a public work. In Mendoza v. Fonseca McElroy Grinding, the court says that transporting heavy machinery to and from a roadwork public works site does not require prevailing wages as work done “in the execution of” a public works contract. Because of the specifically narrow question asked by the Ninth Circuit, the court leaves open the possibility that the transporting can qualify as “public works” under other statutory language. Justice Cuéllar says in his 24-page Busker dissent, signed by Justice Liu, that the majority in both cases “radically constricts the prevailing wage law’s scope and undoes an established line of decisions — all under the rubric of judicial modesty.” Justice Liu writes a separate dissent in Busker that Justice Cuéllar joins. Justice Cuéllar also writes a dissent in Mendoza, which Justice Liu signs. Justice Corrigan wrote the March opinion in Kaanaana v. Barrett Business Services (2021) 11 Cal.5th 158, where the court found a broader statutory definition of “public works” for sanitation and other districts than for other public agencies. In Mendoza, the court overrules its 4-3 decision in Bishop v. City of San Jose (1969) 1 Cal.3d 56 (a case with two pro tems, one in the majority and one in dissent), and it disapproves a 1976 Second District, Division Three, opinion, a 2007 First District, Division Five, opinion, and a 2014 First District, Division Three, opinion.
SO LONG, CALCHAMBER: Allan Zaremberg will wave goodbye to the California Chamber of Commerce at year’s end after more than two decades leading the political powerhouse.
Zaremberg has guided the conservative-leaning, pro-business organization through California’s leftward shift, helping to maintain CalChamber’s influence in the Capitol even as Democrats have dominated the state Legislature. He was named president and CEO in 1998, taking charge during a period when Republicans had maintained control of the governor’s seat for 16 years. But even as conservative influence in the state dwindled, CalChamber remained a challenge for the left. The group’s dreaded “Job Killer” list, first released in 2004, has become a Capitol institution and helped to stop many progressive bills in their tracks, from expanded sick leave to rent control. CalChamber in 2003 endorsed Arnold Schwarzenegger in the state’s first gubernatorial recall and became a reliable supporter during his tenure. But the group has not taken a position on the Newsom recall this year.
Employers Are Struggling With Whether To Mandate COVID Vaccines For Their Workers
Across the country, there is now an urgency to getting workers vaccinated, but how to get there is up for debate. While many companies are offering monetary incentives and paid time off for getting the shots, a growing number of firms are telling their employees to get it done now.
Hospitals and health systems have led the way, with about 1,750 issuing vaccine mandates so far, according to the American Hospital Association. But in recent weeks, companies outside health care have followed suit — United Airlines, Tyson Foods and Walmart among them.
Still, there doesn’t appear to be a bandwagon mentality, even within industries. After United announced its mandate, Southwest, American and Delta all said they would continue to “strongly encourage” but not require team members to get vaccinated. At the state level, there is even greater diversity in approaches. While some states have banned vaccine mandates, Washington state is among those requiring vaccines for all state employees and contractors. “We are past the point of thinking we can test our way to safety here,” Washington Gov. Jay Inslee said last week in a press conference, adding that workers will have to get vaccinated if they want to keep their jobs.
Court challenges to vaccine mandates have so far been unsuccessful. In June, a federal judge dismissed a lawsuit brought by Texas hospital workers who refused to get vaccinated. More than 150 health care workers resigned or were fired. Last week, Supreme Court Justice Amy Coney Barrett declined to interfere with Indiana University’s rule requiring faculty, staff and students to be vaccinated by fall.
Unions have also been split on mandates, even within their own ranks. After Tyson Foods announced its workers must meet fall deadlines for vaccinations, the United Food and Commercial Workers union, which represents 24,000 Tyson meatpacking workers, released a statement raising concerns.
“While we support and encourage workers getting vaccinated against the COVID-19 virus, and have actively encouraged our members to do so, it is concerning that Tyson is implementing this mandate before the [Food and Drug Administration] has fully approved the vaccine,” the union’s president, Marc Perrone, said in a statement. In California, Richard Louis Brown, president of SEIU Local 1000, representing nearly 100,000 state workers, sent a cease-and-desist letter to the California Department of Human Resources protesting its vaccine requirements, even though his membership is split on the issue. “To those who say, ‘You must get vaccinated,’ well, who are you to tell somebody what to do with their body?” he said in a recent Zoom call with members. “To those who say, ‘My civil liberties are being violated,’ I strongly agree with you.” Brown then noted that he did get vaccinated out of respect for his boss’s older parents.
September unemployment cliff looms for 7 million Americans
More than 7 million Americans are set to lose their unemployment aid immediately after Labor Day, even as the delta variant poses new challenges to the economic recovery
Study finds high levels of perceived discrimination in the building industry
New research quantifies the level of discrimination that people of color and women workers experience in the commercial and residential building industries. Seventy-two percent of Black or African-American respondents and 66% of women respondents to a National Institute of Building Sciences survey said they have experienced discrimination or prejudice while at work. People from other non-White groups also indicated encountering similar attitudes. Many of the people of color and women respondents stated they have to work harder than others to be valued in their roles in the commercial and residential building industries, according to the study by research firm Avenue M. Many people in these groups also do not believe they have equitable opportunities to advance their careers.
California recommends private employers require COVID vaccines or testing for workers
California officials are calling on private employers to require their employees to be vaccinated against the coronavirus or be subject to regular testing. Jeong Park in the Sacramento Bee
Apple expansion in San Jose, Calif., to begin soon
A spokesperson at Apple has confirmed the company will begin construction soon on part of an expansion at an 85-acre campus in San Jose, Calif. The company plans to help relocate people in a homeless encampment. Full Story: San Jose Mercury News (Calif.) (tiered subscription model)
Construction underway on LAX train system
Los Angeles International Airport’s $14.5 billion modernization for the 2028 Olympics is taking another step as work begins on an automated train system with six stations. The system is expected to be ready in 2023. https://losangeles.cbslocal.com/2021/08/16/day-night-closures-shut-down-several-lanes-century-boulevard-lax-people-mover-construction/
$290M Calif. arena project to enter “concrete mode”
AECOM Hunt has placed 3,000 cubic yards of concrete at the site of the $290 million Coachella Valley Arena in California. The project, which began in June, is set to enter “concrete mode” as crews turn their attention to foundation walls, retaining walls and interior columns, project executive Bill Deiter says.
Full Story: KESQ-TV/KPSP-TV/KDFX-TV (Thousand Palms, Calif.)
Prepared by Mark Smith, Advocate, California Builders Alliance
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