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Home>Levelset Community>Legal Help>The owner ordered the contractor to incur overtime costs as corrective efforts under the contract (as permitted by the contract) in order to achieve substantial completion on or before the completion date. Section A.8.2.4 of the contract states that the owner will not be responsible for paying the contractor the overtime costs incurred unless the required corrective efforts were caused by the owner's delay. The contract sum can't be increased as a result of such corrective efforts unless substantial completion wasn't met due to a delay caused by the acts or omissions of the owner. Assume the delay was not caused by the owner. Exhibit B to the contract states that the owner must pay the contractor for all labor costs including wages paid to those working on the site. Exhibit B doesn't specify whether wages includes overtime costs). Can the contractor argue that overtime costs are wages and therefore he is entitled to payment of overtime costs regardless what section A.8.2.4 says?

The owner ordered the contractor to incur overtime costs as corrective efforts under the contract (as permitted by the contract) in order to achieve substantial completion on or before the completion date. Section A.8.2.4 of the contract states that the owner will not be responsible for paying the contractor the overtime costs incurred unless the required corrective efforts were caused by the owner's delay. The contract sum can't be increased as a result of such corrective efforts unless substantial completion wasn't met due to a delay caused by the acts or omissions of the owner. Assume the delay was not caused by the owner. Exhibit B to the contract states that the owner must pay the contractor for all labor costs including wages paid to those working on the site. Exhibit B doesn't specify whether wages includes overtime costs). Can the contractor argue that overtime costs are wages and therefore he is entitled to payment of overtime costs regardless what section A.8.2.4 says?

TexasConstruction Contract

Reviewing the construction contract to determine whether the contractor is correct in claiming he is owed the overtime costs because of what Exhibit B says regardless of the wording in A.2.8.4. I think that section takes precedence over the general provision of Exhibit B.

1 reply

Nov 8, 2018
That's an interesting situation. First, it might be helpful to determine whether "overtime costs" are defined in the contract. If the contract can shed some light on what constitutes "overtime costs" it would be much easier to determine whether certain costs should be considered overtime costs. i.e. Just because an owner ordered certain work be performed outside of what's set out in the contract does not necessarily mean that the cost of that work should be bound by the "overtime costs" provisions set out in the agreement. Further, context might help to understand whether "overtime costs" is intended to include merely the project costs the contractor incurs themselves, or whether it's intended to include the payment of wages to subs. While it may be unclear whether "wages" includes overtime costs, there's always the potential that "overtime costs" includes "wages" if the provisions surrounding overtime costs are broadly written. But, at the end of the day, a contractor can really argue whatever they want - if there's a sound basis for the argument in their contract, then it will really be up to the parties/arguments themselves as to what the outcome might be. Reaching out to a local construction attorney would be helpful here - they'll be able to more thoroughly review the situation and contract to make their own conclusions and advise on how to proceed.
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