Earlier this year, the 108th General Assembly of Tennessee passed several bills of interest to owners, contractors, subcontractors, architects and others in the construction industry. This summarizes some of the notable bills.
Underlicensed Contractors/No Lien Rights/Attachment of Mechanics' Liens
A bill clarifies that it is unlawful for any person to bid on or contract for any project in Tennessee unless that person has a sufficient monetary limitation on its license for the project. This codifies a requirement previously set forth in an administrative regulation. The same bill amends the licensing and mechanics’ lien statutes to clarify that contractors and subcontractors are not entitled to a lien if they have not complied with the contractor licensing laws, including any monetary limitation. The bill also amends the definition of "visible commencement" (which establishes the date on which a mechanics' lien attaches to real property) to exclude placement of above-ground utility lines. As originally presented, the bill also would have rendered "pay if paid" provisions unenforceable in Tennessee, but that portion of the bill was removed by amendment. The bill has been sent to the governor for signature. More information about the bill is available here.
Another change in the licensing laws requires all roofing contractors to have a roofer's contracting license from the Board for Licensing Contractors before bidding upon or beginning roofing work where the roofing portion of the project is $25,000 or more. More information about the amendment is available here.
Workers' Compensation Reform
A new law completely reforms the workers’ compensation system in Tennessee. Claims by injured workers now will be handled as part of an administrative process in the newly created Court of Workers' Compensation Claims within the Division of Workers' Compensation. The law also creates a new ombudsman program within the Division to assist unrepresented employees and employers, narrows the definition of work-related injury and establishes medical treatment guidelines. The changes do not take effect fully until July 1, 2014. More information about the law is available here.
Prevailing Wage Act
A new law repeals the prevailing wage requirements for all state funded, vertical building construction projects in Tennessee. It also eliminates mandatory certified payrolls and other paperwork required to be submitted to the state on those projects. The new law does not affect highway (TDOT) projects. The changes take effect January 1, 2014. More information about the law is available here.
Bonds on Public Works
A new law requires that bonds on public projects by any city, county or state authority be "good and solvent," and requires building or bidding authorities to reject bonds that do not meet the requirements. A "good and solvent" bond means, among other things, a bond written by a surety or insurance company listed on the U.S. Treasury Department's list of approved bonding companies. More information about the law is available here.
Project Labor Agreements
A new law prohibits certain practices in public contracting and purchasing, including requiring a bidder, contractor or subcontractor to enter into or comply with an agreement with a labor organization, and creates cause of action to challenge a public works contract in violation of the statute. This prohibits a municipality from implementing a Project Labor Agreement on a construction project. More information about the law is available here.