81st Legislative Session

The Texas Legislature reconvenes for a 140 day session on January 13, 2009. While new issues may arise, the issues listed below are the priority issues set by the Board of Directors for the Texas Construction Association.

Broad Form Indemnification. A clause found in construction contracts provides that the subcontractor indemnifies the general contractor or owner for its wrongdoing even though the subcontractor may have done nothing improper. These clauses and certain additional insured endorsements should be made void. They are in direct conflict with the concept that a company should be responsible for its negligent acts.

Consolidated Insurance Program (CIPs). Known typically as Owner Controlled or Contractor Controlled Insurance Programs, the use of these “Wrap-Up” programs is increasing in Texas. While possibly a money saver for the Owner, the CIPs are plagued by poor administration, gaps in coverage or lack of coverage, insufficient limits, questionable safety and back to work programs, and auditing practices that cause subcontractor=s retainage to be withheld even longer. In many cases, the exposure a subcontractor faces working on a CIP is unknown. In the 2003 session, TCA helped defeat legislation that would have required the use of OCIP=s on every public project and has since worked to establish minimum standards for CIPS. Standards should be set for CIPs in Texas.

Immigration. Monitor Texas Legislature for bills that affect immigration issues. Oppose Texas legislation that makes employers a principal component of enforcement without providing an appropriate safe harbor for employers who act in good faith.

Lien Law Reform. Texas has the most complicated lien laws of any of the 50 States. Our lien laws should be reformed to make them much less complicated and much more user friendly. Particularly, the lien statutes should be amended to clarify the law passed in 1997 relating to the filing of fraudulent liens. The 1997 changes were intended to prevent the filing of bogus liens by individuals and groups such as the Republic of Texas. The statute is overly broad and covers inadvertent mistakes contained in otherwise valid liens in addition to intentional acts. The party filing the lien faces severe civil penalties and possible criminal penalties even though the mistake was not done intentionally or recklessly.

Retainage. If retainage will continue to be withheld for properly completed work, then interest should be paid. Contractors should no longer be bankers for construction projects in Texas.

Workers' Compensation. Some lawmakers have become concerned over recent Texas Supreme Court decisions which interpreted Texas statutes effectively to provide the employer immunity from liability to those who have not been an injured worker's employer previously. While pleasing to many in the construction industry, this judicial solution of providing "statutory" employer or workers' compensation as a sole remedy has created angst for others. A solution to the statutory employer/sole remedy issue on construction projects needs to occur.