Beginning August 6, 2016, Arizona law on independent contractor employment relationships changed for most industries when A.R.S. § 23-1601 went into effect. Section 23-1601 (which is the byproduct of House Bill 2114) is a new statute that allows certain businesses and workers to create a rebuttable presumption of a lawful independent contractor relationship by: (1) having the worker execute a statutorily prescribed Declaration of Independent Business Status; and (2) the business acting in a manner substantially consistent with the Declaration. But general contractors and subcontractors need to be aware that, for all intents and purposes, § 23-1601 does not apply to their businesses. This important limitation has gone unmentioned in the multiple publications/articles I have read on this new law, which is why I am writing this post.
In May 2015, I authored a post addressing the Arizona Court of Appeals’ then-recent decision in Cemex Construction Materials South, LLC v. Falcone Bros., Inc., 237 Ariz. 236 (App. 2015). My post can be found here. The Cemex decision will, however, cease being good law next Saturday. The case was legislatively overruled by House Bill 2268, which was signed into law by Governor Ducey on May 12, 2016 and will become effective on August 6, 2016.
As a reminder, Cemex upended the longstanding construction industry practice of mailing preliminary twenty-day notices on Little Miller Act projects via first class mail with a certificate of mailing. This had been done as a cost saving measure because: (1) Arizona’s mechanic’s lien statute requiring twenty-day notices—A.R.S. § 33-992.01—expressly provides in Subsection (F) that the notices may be provided by “first class mail sent with a certificate of mailing;” and (2) the Little Miller Act section requiring 20-day notices in certain instances—A.R.S. § 34-223(A)—incorporated by reference a significant portion of § 33-992.01. Nevertheless, Cemex held that this industry practice did not comply with § 34-223(A). Specifically, the Court found that the mailing provisions of § 33-992.01(F) were excluded from § 34-223(A), such that Little Miller Act 20-day notices were required to “to be served by registered or certified mail,” like Little Miller Act ninety-day post-completion notices.
It has been several months since I last published a blog entry. My term as the President of the Scottsdale Bar Association and a particularly busy period in my practice have recently left too few hours in the day for blogging. But now that my term has ended, I intend on resuming my regular posts. In light of my time away, I thought it only fitting that this post cover some aspect of delay. I will, therefore, address in this post the often controversial “no-damages-for-delay” clause.
The plain language of Arizona Revised Statute § 32-1153 has long prohibited unlicensed contractors from filing lawsuits to collect payment for unlicensed work. The statute “conditions…claim[s] for unpaid work on licensure ‘when the contract sued upon was entered into and when the alleged cause of action arose.'” Crowe v. Hickman’s Egg Ranch, Inc., 202 Ariz. 113, 115, 41 P.3d 651, 653 (App. 2002).
But what happens when a licensed contractor performs both work for which he is licensed and work for which he is not licensed on a construction project? Is the contractor precluded as a matter of law from seeking to recover for the work performed pursuant to his license because he performed the unlicensed work? The Arizona Court of Appeals recently addressed this issue in Chavira v. Armor Designs of Delaware, Inc., 356 P.3d 334 (App. 2015).
My very first post for this blog (which is nearly two years old) covered the Arizona Court of Appeals’ decision in RSP Architects, Ltd. v. Five Star Development Resort Communities, LLC, 306 P.3d 93, 232 Ariz. 436 (App. 2013). In RSP Architects, the court held that Arizona’s private sector prompt payment laws (A.R.S. § 32-1129 et seq.) do not apply to architectural service contracts. While this remains the case, Arizona design professionals recently scored a victory on the prompt payment front. The Arizona Design Professional Prompt Pay Act (the “Act”) was created earlier this year when Governor Ducey signed H.B. 2336 into law. The Act, which went into effect on July 3, 2015, establishes requirements for promptly paying “design professionals” performing work on state, county, and municipal construction projects. For purposes of the Act, “design professional services” are defined as “architect services, engineer services, land surveying services, geologist services or landscape architect services or any combination…” thereof.