Green industry changes employment law

As the push for renewable energy alternatives continues, more attorneys find themselves representing clients in the wind and solar industries, along with those looking to construct LEED (Leadership in Energy and Environmental Design)-certified buildings.

All construction projects raise labor and employment issues, but do the old laws adequately deal with these new endeavors and do attorneys need to change their approach with clients? The answers are playing out right now, with some lawyers seeing new challenges crop up and others expecting to make more use of the old rules. Chicago Lawyer spoke to attorneys representing employers and labor unions to see how renewable energy is impacting the legal field.

Michael C. Hallerud, a partner in Nixon Peabody's labor and employment practice group, compares the alternative energy industry to the dawning of the dot-com era in the mid-1990s.

"Green technology is at the same point where the dot-coms were 20 years ago," Hallerud said. "It is an immature industry without a lot of infrastructure that is attracting many people new to the industry, and even new to the workforce.

"There is no special set of laws that apply to the area and this may not seem important until mistakes are made and litigation results. When that happens, industry-specific case law will develop."

Employers receiving government funding may be constrained by certain rules related to green technology.

"The biggest impact to date on the creation of 'green' jobs from the labor and employment perspective is the requirement under the American Recovery and Reinvestment Act of 2009 (ARRA) that employees on all construction projects that are funded directly or assisted in whole or in part by stimulus money under that law must be paid the 'prevailing rate' under the federal Davis-Bacon Act," said Duane Morris Partner Howard L. Mocerf, who represents management in labor and employment matters.

"The Davis-Bacon Act requires contractors and subcontractors on federally funded or federally assisted contracts in excess of $2,000 for the construction, alteration or repair of public buildings or public works to pay their employees no less than the prevailing rate of wages and fringe benefits for corresponding work on similar projects in the same geographic area."

Prevailing wage rates get based on union rates in an area and are usually higher than those paid to non-union workers, Mocerf said. Many observers said the Davis-Bacon requirements become a major impediment to green job growth, he said.

Causing much less of an ARRA impact on green businesses, he said, is the requirement that employers who receive stimulus money must comply with Executive Order 11246.

He said it "requires government contractors and subcontractors and contractors and subcontractors on federally assisted construction projects exceeding $10,000 not to discriminate against and to take certain affirmative action measures to increase employment and promotional opportunities of females and certain minorities.

"Holders of nonconstruction government contracts or subcontracts of $50,000 or more and who employ at least 50 employees must develop and maintain written affirmative action plans."

Although affirmative action laws are not new, said Joseph Yastrow, a Laner Muchin management-side labor and employment partner, the rules could become more challenging for green energy employers who might find it more difficult to recruit a diverse workforce since many projects are situated in rural areas with smaller minority and female populations.

"This could subject these employers to liability under Title VII as well as state and local discrimination laws," Yastrow said.

"Green technology tends to require more highly skilled workers, but many green energy projects are going up in outlying areas where there will be fewer people familiar with the technology."

Many lawyers argue that successfully navigating union-related issues remains key in the alternative energy industry.

(From left to right) Ogletree Deakins lawyers Randy Ruff and Richard Samson both weighed in on how green technology affects labor and employment legal issues.

Photos by David Durochik.

As Richard Samson, a shareholder at Ogletree Deakins, said, traditional job descriptions may not apply, resulting in an overlap between crafts.

"One area where this can be a real problem is in the development of wind turbines," said Samson, who represents management in labor and employment matters. "My client had electricians working on various aspects of the project, but the work also included trenching. Trenching is not new, but is also work that operating engineers do, so we had a dispute over who was going to do the trenching."

Samson said the dispute got resolved by assigning some of the duties to the electricians and others to the operating engineers.

The new technologies being used to "green" buildings also lead to disputes, he said.

"Some of the new buildings involve drilling wells to heat and cool water systems," he said. "In Chicago, the operating engineers hold the drilling agreements, but there is also piping that goes into the process. I can see problems arising about where the work done by the operating engineers should end and that done by the pipefitters should begin."

Douglas Darch, chairman of the Chicago office's compensation, employment and labor group at Baker & McKenzie, said he recalls the picket lines outside city hall when a conflict arose over which union had jurisdiction to install the green roof.

"The teamsters, operating engineers and roofers were all claiming part of the work," Darch said.

"If the project gets shut down, the building owner loses time while the National Labor Relations Board resolves the issues."

In cases where workers organize, Darch said conflicting work assignments in labor agreements could create disputes among the union leadership trying to place their members in a particular location.

In addition, he said, if the work assignment violates one of the labor agreements, the contractor could be forced to pay the labor charges twice, leaving "an owner with a time and materials contract holding the bag."

But an even larger issue, Darch said, involves the BlueGreen Alliance, which involves the country's 12 largest unions and environmental organizations.

"This coalition, which includes the United Steelworkers and the Sierra Club, takes an active roll in lobbying for and against federal funding for projects like wind farms that are not economically viable without government funding," Darch said.

"To gain its support typically requires project owners to sign neutrality agreements with one or more of the unions in the alliance or commit to buying only U.S.-manufactured products for the project.

"The steelworkers also have a green school program, which is a political lobbying mechanism that they use to force their members to receive a share of the work. If an employer does not agree to give their members part of the work, they call a lobbyist and ask that the project be opposed."

Darch said it is important to have a traditional labor attorney who can anticipate the conflicts.

"Having a provision in the contract that allows the employer to have an 'out' in the event that the project is picketed or shut down can be very important," he said.

Robert Entin, a former associate general counsel for the International Union of Operating Engineers, Local 150, AFL-CIO, who now represents management as an associate at Polsinelli Shughart, said one way for employers to protect themselves from problems with organized labor is to negotiate a project labor agreement (PLA) with unions or through the local building trades.

"These agreements hammer out all the terms and conditions of employment, including wages and benefits, and apply to all contractors and subcontractors on the job," Entin said. "The big trade off with these agreements is that they include provisions that prevent strikes and other work stoppages."

Labor disputes are not the only legal challenges that attorneys face. As companies seek to develop new technologies, Nixon Peabody's Hallerud said he sees immigration and intellectual property issues developing.

"Let's assume, for example, that a company is looking to create a unique algorithm to help solve a problem," Hallerud said. "Where does the employer find the employees? As you would expect in a new industry evolving across borders in response to a worldwide imperative, many of the people with the required skills are not U.S. citizens. That means the employer is going to have to look outside the U.S. and this is going to raise all kinds of legal issues.

"The employer might have to secure an H-1B visa, but the number of these visas is limited annually and there might be a wait."

Hallerud said relying on foreign workers could make protecting intellectual property and trade secrets more challenging.

"If an employee creates a 'copyrightable work,' such as an algorithm, the employer automatically owns the copyrighted product under the 'work-for-hire' doctrine," he said. "But, what if you could not get a visa and instead commission the research by funding a fellowship program at a university? Now the algorithm's author is an employee of the university, requiring contractual agreements among the company, university and university fellow in order to secure the copyright to the commissioned algorithm."

The fluid nature of employment and the widespread poaching of employees complicates matters even more, he said.

"Noncompete agreements are essential, but they are likely not enforceable if their sole legal and economic purpose is to restrain competition or if they are unreasonably broad in duration and geographic area," Hallerud said. "And, in some jurisdictions, particularly California, they are not only almost universally void, they are likely affirmatively unlawful."

Yastrow of Laner Muchin said green technology also raises new safety concerns under the Occupational Safety and Health Act.

"OSHA's (Occupational Safety and Health Administration) website stresses the importance of integrating employee safety and health concerns into green manufacturing, green construction and green energy," Yastrow said.

"Wind turbines, in particular, present a number of potential hazards. Green employers should review their equipment design, safety procedures and training programs with an expert to make sure they are in full compliance with applicable OSHA regulations."

Joseph Spitzzeri, co-chair of Johnson & Bell's construction and employment groups, said achieving LEED certification requires that specific best practice mechanisms be put into place at the outset of the project's initiation and be monitored during the construction process.

"At the very least, the project manager should have LEED AP (accredited professional) credentials as there are a lot of aspects to green construction that must be adhered to and followed to obtain the specified certification level," said Spitzzeri, who is also a credentialed LEED green associate.

Spitzzeri said green construction requires the general contractor/construction manager to have someone overseeing the project with LEED accredited professional (AP) credentials.

"Often these contract-best practices contractually flow down to the specialty trade subcontractors who should also have someone overseeing their subcontract with at least LEED green associate credentials, if not LEED AP," Spitzzeri said.

"There needs to be someone who understands how all of the work fits into the certification process because LEED points are awarded for various components within the construction process, from site and material selection to design, construction and debris removal.

"The higher the number of points obtained, the greater the certification achieved," Spitzzeri said. "You don't want to be in a position where you've contractually agreed to build a building that will obtain a Platinum LEED certification and then only achieve Gold or Silver LEED certification."

Green construction also requires an integrated team approach "with all the players (owner, architect, general contractor and trade contractors) involved in the design and construction process coming together at the beginning to discuss project goals and requirements, thus avoiding problems down the road," Spitzzeri said.

This integrated approach, however, is raising new legal issues when the new technology does not work.

"A lot of times the technology is not completely thought out," said Randy Ruff, a shareholder in the construction practice group at Ogletree Deakins. "I was involved in a project downstate where water condensed on the underside of a green roof and it virtually rained inside the building. The question then becomes who is responsible? Is it the owner, architect or the contractor?"

Courts now struggle with this issue of shared design responsibility, Ruff said.

"It usually comes down to what the contract says," he said. "The issue is also raising insurance problems because the architect's insurance may not cover directing the contractors and the contractor's insurance may not cover design details supplied by the contractor during the submittal process. These issues will all be resolved as this integrated project delivery system becomes more common."

Some attorneys who represent organized labor said the new industry not only puts people back to work but also creates new jobs altogether.

Dale Pierson, general counsel for the International Union of Operating Engineers, Local 150, AFL-CIO, said PLAs, now get adapted to include wind farm construction.

"Historically these agreements have been used by those building large projects," Pierson said.

"Entering into a project labor agreement for the construction of a wind farm, which is very labor intensive and requires a lot of training, makes sense."

Pierson said these wind farms also give rise to a new type of job, which requires a technician to maintain the wind turbine.

With regard to safety, Pierson said, "The unions are on top of these issues, which is another reason for employers to hire union workers."

Terrance McGann, a partner at Whitfield, McGann & Ketterman, who represents labor organizations and workers, said more jobs get created through government funding used to make public buildings more energy efficient.

"A partnership between Mayor Rahm Emanuel and Bill Clinton creating an 'Infrastructure Trust' will provide private sector funding for infrastructure projects, which will be bid on by energy service companies who will act as general contractors," McGann said.

McGann said many of the building trade unions already offer privately funded apprenticeship programs to train workers to fill green jobs and some manufacturers partner with vocational schools and community colleges to train workers.

Renewable energy classes are available for members of Local 134 of the International Brotherhood of Electrical Workers (IBEW) at the Electrical Joint Apprenticeship and Training Trust.

In addition, the school is working with City Colleges of Chicago to create a renewable energy certificate program.

At Northwestern University School of Law, assistant professor Zev Jacob Eigen said he tries to address labor and employment law-related issues that could assist students interested in green industry representation.

"Jurisdictional issues, interpretation of work rules and the parameters of employer discretion in hiring, firing and workplace discipline are often tested when technology on which industries fundamentally rely changes," Eigen said.

"Perhaps a better approach in evolving industries is for the parties to shift from precise rules to standards-based parameters and guidelines that offer more flexibility.

"I think we are benefited to the extent that law is generally more able to be regarded as evolutionarily viable and as more dynamic than static."

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